Filing for bankruptcy can be an incredibly overwhelming process. However, you may be pleased to learn that the benefits can make the stress of filing worth it, as you can receive serious debt relief, as this process eliminates eligible debts. Unfortunately, this does not happen without some drawbacks to ensure that only those who truly need to file will utilize this process so as not to take advantage of the system in place. One disadvantage of filing is that bankruptcy can remain on your credit report for an extended period of time. To learn more about this impact and how long you can expect this to remain on your report, you’ll want to keep reading. You’ll also learn why working with Franklin County bankruptcy lawyers is in your best interest during this difficult time.
How Does Bankruptcy Impact My Credit Score?
When you file for bankruptcy, the primary purpose is to obtain debt relief. Because certain debts will be wiped away, meaning you no longer have a legal obligation to repay them, it can reflect negatively on your credit report. One of the primary reasons is that your borrowing history makes up the largest factor of your credit score at 35%. As a result, this severe negative event will cause your credit score to plummet. Unfortunately, you’ll find that the higher your credit score is pre-filing, the more it will fall. Those with an excellent score can lose up to 200 points, while those with an average score may see a 150-point drop.
This is because bankruptcy is a red flag to lenders, showing that you have been unable to repay debts in the past. As such, creditors who see this on your report are less likely to extend loans in your name. In the event you are approved, however, you may find that the interest rates for the loan you are approved for are astronomical in comparison to the rates you would be offered had you not filed for bankruptcy.
How Long Does a Filing Remain on My Report?
Unfortunately, because your payment history makes up such a significant portion of your credit score, the history will extend far back. As such, if you file Chapter 7, you’ll find that this process will remain on your credit report for 10 years. Chapter 13, on the other hand, will only remain for 7 years from the date on which you filed. This process is generally faster because you are repaying a portion of the debts, unlike Chapter 7.
You should note that both chapters will automatically be removed, and you do not have to initiate this process. However, you should check your credit report to ensure the information has been discharged. If it has not been discharged despite the fact that it should have been removed earlier, you can file a dispute with the reporting agencies.
If you are considering filing for bankruptcy in Ohio, it is imperative to understand the importance of working with an experienced attorney to guide you through this process. Not only can your attorney guide you through this complex process, but they can also help ensure you do not make any errors that can prolong or jeopardize your case. At Cousino & Weinzimmer LLC, our firm understands how difficult these complex issues are, which is
