Filing Bankruptcy and the Negative Effects on your Credit
Filing Bankruptcy in Arizona
Filing for bankruptcy in Arizona will have a negative effect on your credit. Although filing for bankruptcy in Tucson, Mesa, Glendale, or throughout Arizona might seem like an easy way to erase your debts and start over with your life it also involves many more things that you may not be familiar with. Not only could you lose your home but you will also have bankruptcy stay on your credit report for an average of seven to ten years. Depending on the type of bankruptcy you file for, your credit report could drop by as much as 240 points just after filing.
A chapter 7 or chapter 13 bankruptcy filing will be reported on your credit file for up to ten years. However, in the ever changing society and with the current recession the ding bankruptcy leaves on your credit report is considered less and less important. Even if you choose to file for bankruptcy protection you can rebuild your credit fairly quickly after bankruptcy. An experienced debt relief expert can guide you through the best ways to not only prepare for your bankruptcy but also how to re-build your credit after filing bankruptcy.
Filing for bankruptcy in Arizona has a significantly negative effect on a person’s credit for five to seven years after the discharge of the bankruptcy. The negative effects of filing bankruptcy can prove a serious impediment to obtaining new credit lines and loans. The one benefit is that there are certain lending institutions that loan to high-risk borrowers, such as those with a past bankruptcy. The drawback to obtaining credit quickly after a bankruptcy is that the interest rates can be extremely high. (often 25 percent or more). Once you have filed for bankruptcy in Arizona you will only be able to get very limited lines of credit, which will generally be limited to credit cards and secured loans. In order to get a credit card you will likely have to deposit money with the issuer and will, in essence, be charged more to spend your own money.
However, if you do get a credit card that has a credit builder feature, you can use this to slowly improve your credit rating over time. If you have additional questions about how filing bankruptcy may effect your future credit and credit score. Please contact our Arizona bankruptcy law office today.