Can Bankruptcy Improve Your Credit Score?
Do your financial circumstances keep you awake at night? Do you think that bankruptcy may be your only solution to a problem that is too big for you to handle? The Ursulova Law Offices, a Bankruptcy Law firm in Brooklyn NY, have the answers you need to make the right decision about your financial future.
To a certain extent, our financial health is determined by circumstances beyond our control-from our health and employment status to the country’s economic state and the changes in the political world.
Congress ratified the Bankruptcy Act in 1800 to give American citizens who have experienced a downfall in their lives an opportunity to make a new start and achieve financial success.
Time has shown that bankruptcy is an effective way for citizens to protect themselves from creditors, and gives them a legal way to get on their feet again.
How Bankruptcy Affects Your Credit Score
Bankruptcy was once negatively viewed by many. But the fact remains that many solid citizens have had to deal with a heavy debt burden that has become too great to bear.
Many people feel that bankruptcy will negatively affect their credit score. While this is true to a certain extent, there are some short-term positive effects as well.
As a bankruptcy attorney in Brooklyn NY, can explain, one of the most significant benefits is the elimination of delinquent reportings. If your credit report showed late payment notices and high credit use, this is where a bankruptcy discharge does the greatest good.
A bankruptcy essentially will clear the debts away. Why? Because debts that are discharged in bankruptcy are no longer reported as delinquent. Rather they will be reported as discharged. In some instances, it could boost an already low credit score.
Your debt-to-credit ratio will also improve. The amounts you owe on credit cards and loans make up approximately 30% of your FICO credit score. An essential factor in this is the percentage of available credit you’re using. This ratio is a comparison of your outstanding debt to your available credit balance. The lower your debt is, compared to your available credit, the higher your possible FICO score.
If you have accounts with high credit limits, they are typically frozen or closed when you file for bankruptcy. A Brooklyn bankruptcy lawyer can explain how bankruptcy can help improve your debt-to-credit ratio.
But if you restore debts with low balances and reasonable credit limits, this can also boost a FICO score. After the discharge, obtaining new credit accounts can also help increase the score because you will have very little or no debt compared with available credit limits, resulting in a positive debt-to-credit ratio.
How A Lawyer Can Help Answer Your Questions
As a bankruptcy lawyer in Brooklyn NY can tell you, bankruptcy is a process that takes several months. The Brooklyn Bankruptcy Law Firm of Nadezhda Ursulova—a Brooklyn bankruptcy attorney who has practiced in the field of personal bankruptcy for more than eighteen years —has represented hundreds of clients in bankruptcy court without a denial.
Here is what a bankruptcy attorney can do for you:
- Explain how to protect your property
- Correctly handle tax refunds and other monies due
- Deal with credit cards and loans
- Handle repossessions
- Dealing with family situations
- Handle paying debts
Debts are not a reason to fall into despair. In the end, you are given another chance to change the financial aspect of your life for the better. If you find yourself in a position where you are considering bankruptcy, remember your credit score is not as important as the reasons for having to file bankruptcy in the first place. For example, receiving a new credit card or loan isn’t as crucial as a mortgage foreclosure or wage garnishment.
After you have obtained a bankruptcy discharge, you may find that it actually helped your credit. Contact the Ursulova Law Offices in Brooklyn, the financial district, or Garden City, New Jersey. They will be happy to answer any questions you may have to enable you to feel comfortable about the decision you are about to make.