The damage of a bankruptcy filing to your credit is probably much less than you expect. (I’m shocked at how many people actually believe that you can’t get credit cards or loans for 7 or even 10 years after filing). In fact, most people considering bankruptcy have a record of late or missed payments and/or high credit balances reflected in their credit report. Some may also have charged off accounts or even accounts in collection. Their credit score is already low. For these people, the horse is already out of the barn. The task is to improve their credit score as quickly as possible, so they can again borrow at competitive rates.

Filing bankruptcy in such a situation does not have a major negative impact on your credit score and, in some instances, may actually improve your credit score. How is this possible? High debt balances, late payments, and charged off accounts are wiped clean on the credit report when you file bankruptcy. These debts continue to show as “Included in Bankruptcy” for up to ten years. But since they are no longer carried as debt balances or delinquent accounts, they no longer bring down your score based on these categories. As time passes, the “Included in Bankruptcy” items carry less weight in your credit score. Also, as your credit score compares you to other bankruptcy filers, this causes a further positive effect on your score. As a result, someone who has filed bankruptcy can have a very good credit score providing good borrowing habits after your filing. In fact, many bankruptcy filers improve their credit scores back into the 700s within two to three years. It is important after filing to re-establish good credit with your new credit cards by paying balances, preferably down to “0”, on a month to month basis. Even obtaining a home mortgage is possible following only two to three years, of good post-bankruptcy debt management.

Get the facts. Contact the Massachusetts bankruptcy attorneys at Nashawaty & Rand today.

The Massachusetts bankruptcy attorneys at Nashawaty & Rand serve clients throughout the Greater Boston Massachusetts region including Abington, Avon, Boston, Braintree, Brockton, Bridgewater, Canton, Dedham, Dover, Easton, Hanover, Hingham, Hollbrook, Marshfield, Medfield, Milton, Norwell, Norwood, Quincy, Randolph, Rockland, Sharon, Stoughton, Walpole, Westwood, Weymouth, Whitman, Massachusetts.

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