Credit Report and BankruptcyBankruptcy is the legal process that an individual or family may complete in order to have their qualifying debts discharged.  When debts are discharged, the family no longer has to pay them and the bill collectors have to stop contacting them – which sounds like very good news to a lot of Georgians who are having trouble meeting their monthly bills.

Now, while it is true that bankruptcy carries significant benefits for many people, it can also have long-lasting consequences especially for a person’s credit report.  Since your credit report is reviewed by lenders when you try to buy a car, rent an apartment, or take out a mortgage, it is essential that you understand exactly how filing for bankruptcy can affect your credit report – and how long these effects are likely to last.  We have experienced bankruptcy attorneys in Newnan to help answer your questions. Read on to learn more about this critically important issue.

How Long Will the Bankruptcy Case Stay on My Report?

A bankruptcy case will stay on your credit report for 10 years.  Unlike other sorts of credit issues that you can request to have removed from your report, you cannot have your bankruptcy case removed from your report prematurely.

Please note that in some cases, the bankruptcy case can actually help your credit report because any debts that you have discharged during the bankruptcy process can no longer appear as “past due” or “unpaid” on the report.  This is just one of the ways that a successful bankruptcy case can help improve your financial state.

Will My Bankruptcy Prevent Me From Getting a Mortgage or Other Loans?

The good news is that, in general, the mere presence of a bankruptcy case on your credit report does not prevent you from qualifying for a mortgage, leasing a car, obtaining a new credit card, etc.  However, most lenders will take a previous bankruptcy filing into consideration when they decide what interests rates to offer you or when they schedule your payment plans.

It must also be highlighted that the extent to which a bankruptcy case will affect your actual credit score will largely depend on how good your score was before you filed for bankruptcy.  Usually a person’s credit score is already a bit lower before they file for bankruptcy because the person’s debt to income ratio is relatively high (and should be in order to qualify for a Chapter 7 bankruptcy).  If that is the case, then the credit score should not decrease very much.

Will My Bankruptcy Case Affect My Spouse’s Credit Report?

As discussed elsewhere on our blog , the law does not require married couples to jointly file for bankruptcy (but they can if they wish).  In general, a husband may file for bankruptcy on his own and the case will not affect the financial state or credit score of his wife.  However, there are some instances where the non-filing spouse may be affected is the couple owns property jointly, such as their marital home or a bank and/or savings account.  Since these types of issues must be considered when filing for bankruptcy, we highly encourage Georgians to work with an experienced attorney during this process.  Remember, in many cases you cannot “take back” a bankruptcy.

As you can see, bankruptcy should not be rushed into without considering all of the consequences.  If you have questions about the bankruptcy process and what other debt relief options may be available to you, contact our office today to speak to one of our bankruptcy attorneys about your case.  We look forward to working with you!