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Bankruptcy and Credit: What You Need to Know

Filing for bankruptcy has a significant effect on your credit score and borrowing capacity. However, you can still improve your credit score after a bankruptcy especially if you have sound legal advice from experienced professionals in the financial industry. A bankruptcy filing remains on your credit report for years and will be available to future potential lenders. In fact, some strict lenders and financial institutions automatically deny loan applications when they see a bankruptcy report on their credit history. Here are a few ways filing for bankruptcy will affect you and how to regain your credit worthiness.

According to numerous credit bureaus, the FICO credit score is the most important factor that lenders consider when giving credit. Lenders use the FICO credit score to determine how much credit they can give, the interest rates, and other logical risks involved in the transaction. Borrowers with high FICO credit scores are permitted to borrow larger sums and at lower interest rates. On the other hand, a borrower with a low FICO credit score will be charged higher interest rates for loans while also being significantly limited on the amount they can borrow. Payment history makes up 35% of the total credit score so there is a possibility that filing for bankruptcy will not cause a huge credit score drop. This is especially true for borrowers with a consistent payment history. The total debt you owe also accounts for 30% of your credit score. However, even with a consistent payment history, filing for a bankruptcy report is a huge red flag for most financial institutions and lenders.

Hiring a bankruptcy lawyer is the best course of action when facing a bankruptcy possibility. According to case studies done by financial experts, 60% of people who work with bankruptcy lawyers when facing such a possibility successfully navigate their way back to financial soundness. If you have already filed for bankruptcy, hiring a bankruptcy lawyer is a sure way of knowing everything there is to know about how to redeem your financial situation. However, finding a reliable bankruptcy lawyer can be daunting especially in metropolitan areas.

You can easily hire a reliable bankruptcy lawyer in your city if you start your search online. The majority professionals in the legal industry understand the significance of the internet and how it affects business. These professionals have invested in websites and social media platforms where they provide valuable legal information to the general public. Websites and social media pages that are constantly updated with valuable content consistently attract new prospects for these professionals. Searching the internet only requires a stable internet connection and few minutes at most.

Another effective way of hiring a bankruptcy lawyer is by asking for recommendations from people you know and trust. Getting recommendations from people who’ve been bankrupt before is a smart move because they will recommend the lawyers who represented them. Filing for bankruptcy is redeemable if you follow the right steps and put in the required effort.

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