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Blog > 2017 > May > Will Bankruptcy Ruin My Credit Forever?

Will Bankruptcy Ruin My Credit Forever?

May 20, 2017
Bankruptcy Ruin My Credit

A question I’m often asked by potential clients is “Will bankruptcy ruin my credit forever?” It’s become apparent that many people in need of a bankruptcy’s benefits will avoid filing one and just live with their piling debts due to this fear. However, nothing can be further from the truth. In fact, a bankruptcy can be the quickest way to rebuild your credit.Â

It is true that a bankruptcy will remain on your credit report for ten years, yet that does not mean you will not be able to build or obtain credit for those ten years. The simple fact is that so many people are filing for bankruptcy during these economic times that a bankruptcy showing up on your credit report doesn’t carry the negative weight that it once did.

A large portion of people filing for bankruptcy aren’t filing because they are irresponsible or careless with their debts (which is usually the reason people are denied credit by lenders). There are many people who file for bankruptcy due to a recent illness, a divorce, a loss of a job, or some other unexpected change in circumstances that makes it impossible to continue paying debts.

Some people who are in a comfortable situation when they first apply for and incur debt don’t anticipate a loss in income. Other people file bankruptcy just because it’s a good business decision. Creditors and lenders understand that this can be the case. They know that people need to file for bankruptcy to get a fresh start and start over. Just because a person can no longer afford to pay bills does not mean they aren’t creditworthy. Therefore, creditors may not be so reluctant to deny credit after a bankruptcy at the risk of losing a potential customer.

So will a bankruptcy ruin a person’s credit forever? Of course not. People that file for bankruptcy actually receive credit cards in the mail without even applying for them. Of course these are minor credit cards with very low credit limits, but they are a start towards rebuilding credit and getting back towards a high credit score. We advise our clients of three simple things after they file bankruptcy: One, USE YOUR NEW CREDIT CARDS. Use them each month to buy something simple like a pack of gum or a cup of coffee. Two, DO NOT MAX THEM OUT. Just use them to pay for the small things. The more available credit you show, the better your credit reports and score look to newer lenders. Three, PAY THEM BACK ON TIME. If you’re only charging on the cards once or twice a month, and leaving lots of available credit on them then you’ll have a very low and affordable payment due. Even better if you can pay off the entire balance each month. You’ll save a bunch in interest and fees.

Once creditors see that you’re responsible with the new credit you’re given, then that will only lead to more creditors wanting to extend credit. As your creditworthiness grows, so will your ability to get large credit lines within a year after bankruptcy, car loans with low interest rates within a year after bankruptcy, and even mortgage loans within two years after bankruptcy. These three simple steps can lead to a credit score in the 700s or even 800s within TWO years after filing a bankruptcy.

If you have any concerns about the pros and cons of a bankruptcy, please feel free to contact our attorneys for a free consultation. You can find our contact information at

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