What Happens to My Credit After Bankruptcy?

 Posted on February 22, 2024 in Bankruptcy

Filing for bankruptcy can be an upsetting experience and many people try to avoid doing so at all costs. However, if you are overextended and unable to pay the money that you owe, bankruptcy is a way to help that can offer some breathing room as you try to get out of your debt and become financially stable. Some misconceptions about bankruptcy make people hesitant to file, for example, that once you have filed for bankruptcy, your credit will be tarnished forever, and you will never be able to get a loan. The truth is that there is hope after bankruptcy. An experienced Geneva, IL bankruptcy attorney can explain why and how you might get there too.

Is It Possible to Have Credit After Filing for Bankruptcy?

As a general rule, bankruptcy tends to stay on your record for seven years following the conclusion of your process, and it will affect your credit during these years and for some more years to follow. However, if you make consistent efforts to pay off the debts that put you into bankruptcy and to avoid debt going forward, the impact of your bankruptcy will slowly start to get smaller and smaller.

Several years after declaring bankruptcy, it can be feasible to be granted a loan.

Some lenders are willing to offer loans to people who have only recently repaid their debts and emerged from bankruptcy. However, since this is a higher-risk loan for them, they will charge higher interest rates in exchange for this service. While this is extremely helpful at a time when someone truly needs something, and they are not able to afford it, people also need to think long and hard about whether it is worth it. If you need to pay multiple times the amount of money you otherwise would have, then getting a car loan, for example, might not be worthwhile for you and could pose the risk of sending you back into bankruptcy. While it might not always be a good idea to get a loan, it is important to note that even after bankruptcy, loans are available for those who truly need them.

Schedule a Free Consultation with a Geneva, IL Bankruptcy Lawyer

If it seems you might need to file for bankruptcy soon, you should speak with a knowledgeable Kane County, IL bankruptcy attorney who can offer you guidance based on experience with similar cases. Call DLAW, PC at 331-222-7978 to schedule a free consultation.