It is a common misunderstanding that once you file for bankruptcy, your credit will always suffer. This is not necessarily true in every case. In many instances, bankruptcy is actually the best thing that could happen to your credit. NerdWallet explains that a bankruptcy stays on your credit for seven to 10 years after the discharge date, depending on whether you file Chapter 7 or 13. However, that does not mean the bankruptcy will affect your ability to get credit for seven to 10 years.
There are a few good things that will happen after the court discharges your bankruptcy case. This can help you to get your credit back on track a lot quicker than you may think.
Rebounding score
If you file bankruptcy, then the chances are good that you have a lot of debt. This debt drags your credit score down. By discharging that debt and removing it from your credit report, you may see a rise in your credit score fairly quickly. Many people see their scores go up within months if they file Chapter 7. A Chapter 13 case will take longer to discharge and adjust your credit report.
Lower risk
Besides wiping your discharged debts off your credit report, another big benefit of filing for bankruptcy is that your creditors know you cannot file again for eight years. So, if they extend you credit, they will be able to get their money in most cases. This lowers the risk you pose to them. Some creditors may see this as a benefit and extend you credit shortly after you file.
Filing bankruptcy helps you to get control over your finances again. You can stop collections and garnishments and get a fresh start to your credit. While it may be harder to get unsecured credit, you still have many options in secured credit to start rebuilding.
