Louisville Kentucky Bankruptcy: Will It Affect My Credit Rating?

For most people, the decision to file for bankruptcy in Louisville, Kentucky is one that is made after lengthy contemplation and consideration. Most people try numerous alternatives first before finally deciding that bankruptcy is the best, or only, option available to resolve their financial problems. One of the many concerns that often cause a debtor to hesitate before making the decision to explore bankruptcy is the impact that bankruptcy will have on his or her credit rating. In fact, one of the most common questions we get is “Will Louisville Kentucky bankruptcy affect my credit rating?” The answer is “yes” but probably not nearly as much as you think or for as long as you think.

Louisville Kentucky Bankruptcy

While it is certainly understandable that you are concerned about your credit rating, chances are good that your credit score has already taken a hit if you are having financial problems. While some debtors do manage to keep their score solid despite financial struggles, most people who are facing financial problems lose at least some points from their credit score before they ever file for bankruptcy. Either way your credit score will likely drop when you file your petition for bankruptcy.

Before you panic, this drop is only temporary. If you file a Chapter 7 bankruptcy in Louisville, Kentucky, your credit score will likely begin to climb back up right after your bankruptcy is discharged, about four to six months after filing. Your score typically will bounce back because you have eliminated debt, giving you a much more favorable debt to income ratio. If you keep one or more accounts open, and continue to pay on time, your score will bounce back even faster. Many debtors qualify for a car loan soon after discharge in a Chapter 7 and may be eligible for an FHA or VA backed mortgage as soon as two years after discharge.

If you file a Chapter 13 bankruptcy in Louisville, Kentucky, you will start making monthly payments pursuant to your repayment plan shortly after filing. As these will show as being paid on time, your credit may start to improve soon after filing. By the end of your Chapter 13 bankruptcy (usually three to five years) you will have a lengthy history of on time payments and you will have eliminated debt. With the approval of the Bankruptcy Court you may even qualify for a vehicle loan during your repayment plan period.

Don’t let concerns about your credit score prevent you from considering Louisville Kentucky bankruptcy as a viable option if you are facing financial difficulties.