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How Does Bankruptcy Affect My Credit Score?

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How Does Bankruptcy Affect My Credit Score?

  Your credit score and what appears on your credit report are used frequently to determine your financial health. Each time you apply for a credit card or a loan, the creditors and lenders scrutinize your credit history to determine if you will be able to make timely and complete payments. Living with debt has become a way of life for many people living in the United States. People have become complacent and believe it is rather normal to live alongside debt that will keep them paying unnecessary interest for years and years.

The thought of using bankruptcy as a means of controlling your debt scares many people as they believe their credit scores will be ruined forever. While it is certainly true that your credit score is likely to take a dip after you file for bankruptcy, you will be able to rebuild your credit in a healthy way by doing so without any debt holding you down. Filing for bankruptcy is making the decision to address your debt head-on, instead of being a slave to never-ending interest fees that consume a large portion of your income month after month.

Why You Need Credit to Be “Creditworthy”

Many people believe that they will have good credit if they have no credit cards at all, and no loans to make payments on each month. This makes you financially healthy and free from dealing with creditors and lenders. However, our financial system is intertwined with evaluating the creditworthiness of businesses and individuals. As such, it is essential that businesses and individuals have at least one or two creditors and lenders. This may seem counterintuitive, but in order to build credit, you must be able to show creditors and lenders you can take on debt and pay off that debt.

Therefore, having at least one credit card or one loan, and being able to pay off the debt will show creditors and lenders you are “creditworthy.” You will then have a good credit history that will help you get a mortgage in the future when you decide to purchase a home. It is important to remember, however, that having multiple credit cards or loans could lead you into spiraling debt that does harm your creditworthiness. If this has been your situation, bankruptcy can be the debt-management tool that helps you take control, wipe out your debt and begin to rebuild your credit from a clean slate.

Why You Should Speak With a Debt-Management and Bankruptcy Attorney

Deciding whether or not to take on a new credit card or loan is something that should be considered thoroughly. Being impulsive and acquiring multiple credit cards can be more detrimental to your financial health than filing for bankruptcy. To fully understand the ramifications of credit

card and other debt, and how bankruptcy can be your solution, you should consult with a skilled debt-management and bankruptcy attorney as soon as possible.

Contact The Law Offices of Georgette Miller and Associates, P.C. Today

Filing for bankruptcy may feel like you are giving in to defeat, but in reality you are making a smart decision to tackle debt and build healthy credit after your debt has been discharged. The debt-management and bankruptcy attorneys of The Law Offices of Georgette Miller and Associates, P.C. have years of experience dealing with creditors and helping people get through the bankruptcy process in the least stressful way possible. The Law Offices of Georgette Miller and Associates, P.C. provides services to businesses and individuals located in and around Philadelphia, PA, New York, New Jersey, Washington, D.C., and Wilmington, DE. Contact our office today by calling (866) 96-GMLAW to set up an initial consultation with one of our attorneys.