O'Brien Law Firm, LLC - Bankruptcy

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Could filing bankruptcy be a good thing for your credit?

Deciding to file bankruptcy is a big decision. It is one you cannot make lightly without considering all the consequences and how filing for bankruptcy in Mississippi will affect you in the years to come. While filing may help you to take care of the problems you currently have with your credit, you may wonder what it will do to your credit afterward. 

The effect that a bankruptcy may have on your credit can actually be positive. To begin with, you will have the debts removed from your credit report, including any collections. This clean wipe can help quite a bit. However, you should note, you will have the bankruptcy show up on your credit report, which is still a negative. If you file Chapter 7, it stays on your credit report for 10 years. If you file Chapter 13, it stays on for seven years. 

The impact 

The impact of a bankruptcy on your credit depends on which one you file. With a Chapter 7, you may see a rebound in your score almost right away because you have so much removed from your report that is negative. With a Chapter 13, since you repay some or all of your debts, it takes a little more time for it to have a positive impact on your credit. 

Future filings 

Furthermore, once you file bankruptcy, you cannot file it again for eight years, which tells creditors that they do not have to worry about that. This makes you less of a risk because they know for sure that you will not be able to get rid of a debt with them through bankruptcy. Essentially, it means they will get any money you owe them. 

Filing bankruptcy is something you should do only with serious consideration, but it can be a good way to get your credit back on the right track.