One of the reasons people claim they are not interested in considering bankruptcy is that they worry that it will negatively impact their credit score. A new study by the Consumer Financial Protection Bureau may put those concerns to rest. Read on to learn more. If you want a free bankruptcy consultation call The Law Offices of Paul Y. Lee at 951-755-1000.
The Study in Question and What it Found
The Consumer Financial Protection Bureau conducted a study over 17 years and found that the average person who files bankruptcy sees their credit score go up every year after their filing. This happens the same year that the bankruptcy is filed.
Creditors Work Hard to Stoke Fears About Bankruptcy
The fact of the matter is that creditors and the collection companies they hire work to convince you that your credit score is going to drop instantly. In fact, the opposite is true. Not only do you get an immediate boost once the debt is wiped out in bankruptcy, but the study shows that median credit scores increase steadily year after year for people who have filed bankruptcy.
Some Types of Bankruptcy Lead to Longer Credit Issues Than Others
The study also found that the median score for a person who filed Chapter 7 will rise more quickly than a person who filed Chapter 13. Remember that this is just on average – it does not apply to all cases. Experts believe it is due to the fact that Chapter 7 bankruptcies are generally discharged so much faster than Chapter 13.
Look at the Big Picture: Hint – It’s Not Your Credit Score
While it is good news that credit scores may be going up faster than previously thought, it is also important to remember that your financial health is about a lot more than a score on a credit scale. Bankruptcy improves your balance sheet by reducing your debt. It effectively increases your net wealth because you are no longer burdened by debt. Yes, many things in life are easier with a higher credit score but do not miss the forest for the trees.
Are You Wondering if Filing Bankruptcy is Right for You?
In the event you are considering filing for bankruptcy we have one suggestion for you: Contact The Law Offices of Paul Y. Lee at 951-755-1000 for a free evaluation. We have been helping clients just like you for many years. It may be that bankruptcy is not the right option for you and we will be honest with you. If it is the right option then we can help you through every step. Call today to get started.
