Will Filing for Bankruptcy Ruin My Credit?


There are many reasons that people put off filing for bankruptcy when it is clearly the best option they have. Some mistakenly believe that bankruptcy represents some sort of moral failing, when in fact the vast majority of people who file for bankruptcy were pushed into financial trouble through no fault of their own. Still, others have heard that bankruptcy will ruin your credit for years and make it impossible to get a credit card or buy big-ticket items like cars or real estate.

As to this second objection, there is some truth to the fact that filing for bankruptcy will temporarily hurt your credit score and that the fact that you filed will remain on your credit report for a number of years, but this only addresses part of the story. The part that is often left out is that, generally, people who can benefit from bankruptcy already have poor credit. If you struggling to pay your bills, chances are that your credit report is full of delinquent payments, collection account, or even judgments, all of which will drag your credit score down.

Bankruptcy Can Eliminate Debt

It is important to remember that filing for bankruptcy can eliminate debt and give you a fresh financial start. Some of the more common kinds of debt discharged in bankruptcy include the following:

  • Medical bills
  • Unpaid rent
  • Personal loans
  • Credit card debt
  • Utility bills
  • Collection accounts
  • Certain tax debts

For many people, the relief obtained through the bankruptcy discharge gives them the breathing room they need to start over, establish good financial habits, and rebuild their credit. In fact, many people who file for bankruptcy have better credit scores than they did prior to bankruptcy within a few years.

Fortunately, there are certain steps that you can take to rebuild your credit as quickly as possible after filing for bankruptcy. These include the following:

  • Pay all of your bills on time
  • Get a secured credit card and pay it in full each month
  • Check your credit reports and dispute any derogatory errors
  • Do not apply for new credit unless you have to
  • Open an installment account

It is Highly Advisable to File for Bankruptcy with the Assistance of an Attorney

If this information has convinced you that bankruptcy is right for you, it is important to understand that filing for bankruptcy is a complicated process and it is absolutely imperative that the information you provide to the court is complete and accurate. In addition, there are several different types of bankruptcy available to consumers, all of which have various advantages and disadvantages. For this reason, anyone considering bankruptcy should be sure to speak with an attorney prior to starting the process.

Struggling with Debt? Call JLT Law to Schedule a Free Consultation with a Salt Lake City Bankruptcy Lawyer

Struggling with debt and poor credit can negatively affect nearly every aspect of your life, including your personal relationships, health, and emotional well-being. Fortunately, bankruptcy may be able to help eliminate your debt and give you a fresh financial start. Attorney Jory Trease has more than 30 years of experience practicing law and takes an individualized approach to every case he handles. To schedule a free consultation with Mr. Trease, send us an email or call our office today at (801) 896-9444.