Improve Your Credit Rating

How Bankruptcy Could Be The BEST Thing For Your Credit Score

Edited by Bryan Keenan

This post will explain why all the myths about bankruptcy are just myths…

Contrary to the bankruptcy myths out there, particularly the total lie that you will have bad credit for 10 years, which is flat out false, for many people, bankruptcy improves your credit score.

In addition to this article there is an article in Wall Street Journal’s “Smart Money” that reaches the same conclusion.

Bankruptcy will not prevent you from getting a really good credit score (even above 700) in less than two years after your discharge. Some clients even get it within 12 months! Can you pay off your debts and get even a 600 credit score in the next 12 months without bankruptcy? Probably not.

Without bankruptcy, one or two or even five years from now you will be struggling along with your debt, missing payments and your credit will be terrible.

What most people don’t understand is that there credit score is already terrible.

Consider this chart comparing how the most common debt solutions will impact your credit score over a three year period.

Three Year Credit Score Comparison Chart (Who wins the race to excellent credit?)

Month1 Month6 Month12 Month24 Month36
Debt Negotiation: good bad terrible terrible so so / good
Debt Consolidation: good bad bad bad so so
Bankruptcy: terrible so so decent good excellent
Doing Nothing: good so so terrible terrible terrible
Repaying on and off: so so so so so so so so so so

After filing bankruptcy you will have the opportunity to get good credit pretty quickly. You have to compare that to how long it would take you to restore good credit without bankruptcy.

Remember, the comparison is not:

‘your imaginary perfect credit score’ vs. ‘bankruptcy credit score’

The comparison is:

‘your CURRENT or PROBABLE credit score’ vs. ‘the post-bankruptcy credit score’

If you are reading this your credit is probably already almost as bad as with bankruptcy, or it soon will be. Bankruptcy will likely have almost no impact on your credit score if you have judgments and old unpaid debts.

If you are going to be late and miss payments, and you otherwise qualify for bankruptcy, there is no question about it. Bankruptcy is your best solution.

Article references:

About the author

Bryan Keenan

Attorney Keenan is a familiar face with the Bankruptcy Court Judges, trustees and practitioners in the state of Pennsylvania, and has handled thousands of consumer bankruptcy files. Attorney Keenan takes pride in keeping up with the constant changes to the local and national bankruptcy rules." Prior to becoming a lawyer he worked as a paralegal for ten years, and, therefore, he has worked in this field for the past 22 years.

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