What will bankruptcy do to your credit rating?

One of the most common questions bankruptcy lawyers get is some version of “what will a bankruptcy do to my credit rating?”

Surprisingly, there is no real answer to the question, as the client is really asking me for a prediction, not a legal or practical opinion. It is just like asking if the Red Sox will win the pennant, or will the stock market rise this year, or will the Atlantic states be battered by hurricanes again? There are those who venture predictions on these matters, with greater and lesser results. But in the end they are predictions, not certainties.

Same thing with your credit score. For most folks in the Lawrence or Salem, NH area, in this market, it’s probably safe to predict that:

1. Your bankruptcy filing will be less significant with each passing year;

2. A recent filing influences the price of credit, so credit at a high price may still be available;

3. You will recover for home buying purposes faster than for getting unsecured credit; and

4. Your credit score will get a modest boost immediately after you get a discharge (four months for most chapter 7 cases).

So those are my predictions, for what they are worth. If you are looking for the hurricane forecast, you can get it here.

And Go Sox!

 

By Doug Beaton

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