Will Bankruptcy Hurt or Help My Credit Rating?
There is no clear answer regarding the impact of a bankruptcy on someone’s credit. Generally, someone thinking about bankruptcy has problems which have already hurt their credit rating. A bankruptcy will stay on your record for ten years, but that does not mean you will go without credit for ten years. Many people are better credit risks immediately after a bankruptcy filing than they were immediately before.
Debtors can begin the process of responsible financial management and wealth building for the future by filing a bankruptcy case. The case eliminates unsecured debt. Because debtors cannot incur any new debt during the bankruptcy case without court approval, bankruptcy forces most debtors to begin budgeting and using cash to pay for what they need. Once the bankruptcy case ends, most debtors can obtain credit (at higher rates) if they need to finance major purchases.