- Free Consultation: 916 459 2364 Tap to Call
Does Chapter 7 Bankruptcy Destroy Your Credit
Bankruptcy, particularly Chapter 7 bankruptcy, can be a daunting prospect for many people. The fear of financial ruin and the potential impact on one’s credit score often deter individuals from considering this as a viable solution for their financial troubles. However, the question remains: Does Chapter 7 Bankruptcy destroy your credit? And is it possible that a bankruptcy case could actually help your credit score, especially if you already have poor credit?
Understanding Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also known as liquidation or straight bankruptcy, is designed to help individuals who are unable to pay their existing debts. In this process, a court-appointed trustee can sell the debtor’s non-exempt assets to pay off as much debt as possible. The remaining unpaid eligible debt is then discharged, providing the debtor with a fresh financial start.
Implication on Credit Score
It’s no secret that filing for bankruptcy can have a significant impact on your credit score. Chapter 7 bankruptcy remains on your credit report for 10 years from the filing date. This can lower your credit score and may make it more difficult to obtain credit in the future. However, the impact of bankruptcy on your credit score is not always negative, especially if you already have poor credit.
Bankruptcy as a Credit-Boosting Strategy
If you’re already suffering from poor credit, due to late payments, defaults, or collections, filing for bankruptcy might not significantly lower your credit score. In fact, it may even offer a chance to rebuild it. Post-bankruptcy, with most or all of your previous debts wiped out, you have an opportunity to start fresh. If you manage to keep your financial affairs in order after bankruptcy, making payments on time and avoiding debt, your credit score can gradually improve.
Seeking Legal Advice
If you’re considering filing for Chapter 7 bankruptcy and are concerned about its impact on your credit score, it would be wise to seek legal advice. The attorneys at Liviakis Law Firm are well-versed in the complexities of bankruptcy law and can provide you with the guidance you need. Contact us at 916 459 2364 to discuss your situation and explore your options.
While the journey to financial recovery might seem long and arduous, it is essential to remember that bankruptcy is not the end. With the right strategies and guidance, it can be the beginning of a new, more stable financial future.