Does filing for bankruptcy destroy your creditworthiness? Does working with a bankruptcy attorney drop your credit score? Consider this: your credit score was your ticket into the attorney's office. You got a seat at your attorney's conference table because you had good credit and the creditors gave you access to credit…maybe even a lot of credit.  And now you have more debt than you can service and you are concerned about your…yep…your credit.  Meeting with a bankruptcy attorney is a step toward rebuilding and redemption. 

Understandable

We totally get it; you think—since you are facing insurmountable bills, hearing from creditors daily or hourly, and fearful of foreclosure—filing for bankruptcy will completely destroy your credit standing. The fear is understandable. 

What is not understandable for many Texans, though, is exactly how the credit industry works. So let's clear up some misunderstandings:

• Your credit score is not the same as a credit report
• If you are late paying any bills, your creditworthiness and credit score have already nosedived
• Repeated instances of late, partial, or missed payments—do far more harm to your credit score than bankruptcy does
• Your credit score is affected by your financial behavior and world financial markets; as worldwide credit tightens, your weak score will drop even if you do nothing else to damage it
• Bankruptcy is a reset switch

Do Over

We call bankruptcy a reset switch because it allows you to stop the creditor harassment, stop foreclosure, and stop IRS garnishment. Another way to think of this is as a Do Over:

• With bankruptcy, you get a chance to tidy up your past financial record
• Bankruptcy discharges significant portions of your debts or reschedules them for repayment at realistic rates
• You get a clean slate, a fresh start, a new beginning

This Do Over will be reflected in your credit report and credit score. As explained by TransUnion (one of the three major credit agencies), after 10 years, your Chapter 7 bankruptcy will fall from your credit report. Your credit score may start the upward climb within 6 months of the filing of your bankruptcy discharge.  

By contrast, year upon year of late, partial or missed payments will never restore your credit score or improve your credit report. 

Try This?

Desperate times, desperate measures; some people think debt consolidation or turning your debts over to a hardball debt negotiator will rescue them. Nope, and nope. Debt consolidation merely repackages your existing debts without eliminating them. Debt negotiators deliberately stiff-arm your creditors on your behalf, cratering your already crippled credit score with no relief in sight.  And some debt consolidation companies only take your money and don't pay your debts, which results in lawsuits against you and once a creditor obtains a judgment against you, the creditor can begin to seize your non-exempt assets.

Weighed against these questionable tactics, filing for bankruptcy has several advantages:

• It is legal
• Bankruptcy is temporary
• It gives you breathing room to recover for financial situation
• Bankruptcy prevents foreclosure on your home 
• It ends creditor harassment
• Bankruptcy appears on your credit report (not your credit score) for only 10 years
• It provides permanent relief from crushing debts

So should you try debt consolidation or debt negotiation? Nope. 

Do This!

Many myths are attached to credit, debt, the lending industry, and bankruptcy. In general, the American public is left largely uneducated about personal finances, often by design of the credit markets. 

Think about it: in any school, were you taught to save, plan for retirement, write a check, or invest? Probably not. Most of us have to learn as adults, on the fly and sometimes through hard knocks. One little repossession and you become very smart at auto loans, for example. 

Most of us are financially semi-literate, and not by accident. By being slightly naive and woefully uneducated, we are easy prey for credit card companies, lenders, and bankers.

Then who is well educated on bankruptcy and debt? A bankruptcy attorney, that's who; partner with a knowledgeable and experienced lawyer who can navigate through the treacherous obstacles you face:

1. Mounting medical bills
2. Unsecured debt from gas cards, store cards, and bank credit cards
3. Unexpected loss of pay due to injury, rolled back hours, or job cuts
4. Inflation
5. Spiraling adjustable-rate mortgages (ARMs)

An experienced bankruptcy attorney can step in, provide advice and counsel, deflect all the abusive and coercive creditor tactics, and provide you peace of mind. Unlike those aggressive debt negotiators, a bankruptcy attorney will be with you through the entire process. Your redemption and renewal starts the day you file but continues through at least seven carefully planned years. 

To learn more about personal bankruptcy, contact us today at The Page Law Firm, or telephone our Denton County offices at 214-618-2101. When you reach out to us, you can schedule a free consultation and learn about real solutions for your financial challenges. Will it be easy? Nope. Will it work? Yes!