When it comes to eliminating debt, there are no easy answers. From Draper to Salt Lake City, countless people throughout Utah struggle each day to pay their bills, mortgage, and car payments. For many, the best solution is to file for bankruptcy. But there is often one major roadblock. Many people are worried about their credit score plummeting after they file for bankruptcy. It is a legitimate concern.
Why Your Credit Score is Important
Maintaining good credit is vital for your financial health. Your credit score plays a major role on some of your most important transactions. It can often determine whether you can purchase a house, a car or even get a job. Unfortunately, many people avoid filing for bankruptcy because they believe it will permanently damage their credit rating. Although bankruptcy will hurt your credit score. It still may be worth the risk.
How Filing For Bankruptcy Impacts Your Credit Score
Ask any Salt Lake City bankruptcy attorney and they will tell you it is impossible to determine how far your credit score drop after bankruptcy. But it is important to understand there will be a noticeable difference. Much of the impact is based on your current credit and the information on your credit report. Back in 2010, FICO published a report on how bankruptcy and other credit mistakes can affect a person’s credit rating. The report used examples of two different profiles. According to FICO, filing for bankruptcy can cost a person up to 240 points for someone with a credit score of 780 and 150 points with someone with a 680 credit score. Numbers can be somewhat deceiving. Although the person with the higher credit score loses more points, in the end, both people would end up with similar scores ranging from 530 to 540. It is important to keep in mind this is strictly an example. If you are planning to file for bankruptcy in Salt Lake City, your score may not drop as much or could drop more. Nobody knows until the process is actually complete.
Not All Types of Bankruptcy Are The Same
Bankruptcy is broad term for the process of resolving a person’s debt and helping them get a fresh start on their finances. But not all types of bankruptcy are the same. Chapter 7 bankruptcy involves eliminating debt through the liquidation of assets. The benefit of Chapter 7 bankruptcy is the process is relatively quick, usually taking a few months. However, not everybody may qualify for Chapter 7. If your income is too high, you may be eligible for Chapter 13. Unlike Chapter 7, it does not involve the liquidation of any assets. Instead, Chapter 13 bankruptcy allows people to resolve their debt through a payment plan. The process usually takes between three to five years.
Are You Seeking Debt Relief Solutions? Salt Lake City Bankruptcy Attorney Justin M. Myers Can Help
When you are struggling with debt, it can be a helpless feeling. Fortunately, there are solutions. Over the years, Salt Lake City bankruptcy attorney Justin M. Myers has helped many hard working and responsible people resolve their debt issues and regain their financial footing. Whether you are looking to file for Chapter 7 or Chapter 13 bankruptcy, he and his legal staff can help you get started. To learn more, contact Justin M. Myers Attorney at Law, LLC and schedule a consultation to discuss your case.