7 Myths About Your Credit Score After Bankruptcy

Seven bankruptcy myths

Image Source: Flickr User sophie & cle

If you’re considering filing bankruptcy, you may worry about the impact on your credit score. Because of some pervasive myths about the negative consequences of bankruptcy, you may postpone or avoid what can be a life-changing financial solution to deal with unmanageable debt. Today we address and dispel these myths and share some tips on improving your credit score after bankruptcy.

#1 Bankruptcy will ruin your credit forever

This is not true. Staying deep in debt that you can’t afford to pay is much worse. If you’re maxed out on credit cards, paying bills late, and delinquent on your obligations, your credit score will continue to fall as long as you stay in this state. In fact, bankruptcy can put you in a position to better you score.

#2 Bankruptcy will prevent you from getting new credit

This is also a myth. In fact, within six months to a year after discharge, you can apply for a secured credit card and within nine months to 12 months (give or take) after discharge, you can usually get an unsecured credit card so long as you’ve kept up with your obligations after you filed.

#3 Bankruptcy means you can’t get a home loan

While it’s true you likely won’t be able to get a new mortgage right after you file bankruptcy - you should be able to qualify for one within 18 months to 36 months post-discharge. This depends on you paying all your bills on time, saving up a down payment and being responsible with new credit.

#4 Bankruptcy can keep you from getting a job

While it is true that a low credit score or delinquencies on your credit report may keep you from getting a job that requires a credit check - it’s likely not true that bankruptcy will trigger the same denial. Because bankruptcy clears up old past-due balances, it can be a help for jobs that requires credit checks.

#5 Bankruptcy means you’ll lose your house or car

If you are delinquent on your mortgage or car payment, bankruptcy can help you avoid foreclosure or auto repossession and allow you options to get current, refinance, shed a second mortgage, or reduce interest rates or balances depending on the bankruptcy chapter you file.

#6 Bankruptcy will be revealed to everyone

Yes, bankruptcy is a matter of public record. But no, most people won’t know. In some areas, newspapers may print lists of bankruptcy filers, but this is usually not done for consumer filers – it’s usually done for business bankruptcies. Foreclosures, however, must be published publicly.

#7 Bankruptcy requires both spouses to file

No, couples do not have to file joint bankruptcy. If both partners name are listed on the delinquent debt, it may be wise. But if the bulk of the debt is only in one spouse’s name, then filing individually may be preferable. There is no requirement that spouses must file together.

Find out more about North Carolina bankruptcy today

Are you living paycheck to paycheck? Are you unable to save because every penny goes to your bills? Are your credit cards maxed out? Have you spent your savings trying to cover the debt? Are you being hounded by collections calls and letter? If you are dealing with any (or all) of these circumstances, know that you don’t have to live in debt and stressed out.

Contact the Law Offices of John T. Orcutt today for a free North Carolina bankruptcy consultation to find out if bankruptcy is your best approach to debt relief. Call +1-833-627-0115 now for a free appointment at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro or Wilmington. Come in and see us – we’ll look at your debt, income and assets and advise your best course of action to get out of debt.