One of the most common issues, holding people back from filing Bankruptcy, is the misconception that Bankruptcy ruins your credit forever. Nothing could be further from the truth. In fact, for most people with high amounts of debt and derogatory marks on their Credit Report, Bankruptcy will actually help their Credit.
A person's Credit Score is only one factor in determining whether a lender approves a loan application. The most important factor, in determining whether a loan application will be approved, is your Debt-To-Income Ratio. Even if you have a Credit Score over 700, if your Debt-To-Income Ratio is high, not many lenders will want to loan you more money except High Risk Lenders who charge exorbitant interest rates and usually want some form of collateral to secure the loan.
Filing Bankruptcy eliminates debt and improves your Debts-To-Income Ratio. An improved Debt-To-Income Ratio improves the way lenders at the risk you will default on any credit they extend to you. The reason for this is very simple, less debt compared to the same income means you have more money to repay a new loan. For example, all other things being equal, the risk of default on a new loan by someone making $50,000.00 a year who has $100,000.00 in debt is far greater than the risk of default on a new loan by someone making the same $50,000.00 a year who just filed Bankruptcy but has no debt. Moreover, lenders know that a person can only receive a Chapter 7 Bankruptcy Discharge every 8 years and this provides protections to the lender that don't exist in someone with high debt who hasn't sought Bankruptcy Protection.
In addition, the adverse affect of Bankruptcy on one's Credit Score diminishes over time. A Chapter 13 Bankruptcy stays on a person's Credit Report for 7 years and a Chapter 7 Bankruptcy stays on a person's Credit Report for 10 years. Moreover, as time passes, the importance of the Bankruptcy in computing your Credit Score diminishes as well.
Furthermore, as long as you meet other general requirements, many government agencies approve mortgages to purchase a new home in as little as 24 months after your Bankruptcy. Unless you clean up your Credit Report through some other means, like inheriting enough money to pay off your debts, that same mortgage won't be available in 24 months unless you file Bankruptcy.
Finally, you can always take steps to rebuild your Credit Score. These are some simple ways to do that:
Don't let the fear of ruining your credit prevent you from making a Fresh Start with you financial affairs. Put the Past where it should be: In the Past! Tomorrow is a new day and Bankruptcy can give you a new lease on Life. Call me today at (513) 528-0200 and let me show you how Bankruptcy Makes Life Better.
I look forward to helping you.