One reason that many people are hesitant to consider bankruptcy is because they do not want their credit score to be negatively affected. This score can play a significant role in your ability to obtain credit or loans in the future, so if you are planning to buy a home or car or make other large purchases, you may worry that bankruptcy will prevent you from doing so. However, if you are considering bankruptcy, it is likely that you are already encountering issues that may significantly lower your credit score, such as missed payments on credit card debts or other bills. Rather than trying to dig your way out of the hole you are in, bankruptcy can provide you with a fresh start, and while your credit score may take a hit, you can begin rebuilding your credit after wiping out some or all of your debts.
Time Needed to Rebuild Credit After Bankruptcy
The amount of time bankruptcy will stay on your credit report will depend on the type of bankruptcy you file. Chapter 7 bankruptcy will remain on your record for 10 years, but Chapter 13 bankruptcy will only affect you for around seven years. While a bankruptcy filing may limit your opportunities to receive loans, as time passes after a bankruptcy, creditors will be less likely to see you as a risk.
To increase your credit score and make yourself more attractive to creditors, you can take a number of steps in the years following a bankruptcy, including:
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