As you consider filing for Chapter 7 or Chapter 13 bankruptcy, you may grow concerned about the impact it will have on your credit score. Although this is not something that will improve your rating, it is important to note that the damage it will cause is based on many factors, including your score before filing for bankruptcy in Philadelphia.
If your credit score is low when filing for bankruptcy, your score will not take a large hit. After all, it is already at the low end of the spectrum with not much further to go until hitting rock bottom.
On the other side of things, if your credit is good before filing for bankruptcy in Philadelphia, you can expect your score to take a larger hit. This may not sound fair, but it is the way the system currently works.
Can I get a Loan after Bankruptcy?
There is no simple answer to this question. Instead, it is based on what you are trying to accomplish.
Believe it or not, most people who file for bankruptcy will find themselves with many offers for credit cards once the process is complete. Credit card companies realize you are looking to get back on your feet, and that you are unable to file for bankruptcy again for several years. Subsequently, they will want your business.
Tip: with a bankruptcy on your credit report, expect any credit card offer to be accompanied by high interest rates and other fees.
What about a car loan? Once again, the details of your situation will determine this. You will likely be able to find a lender willing to work with you, however, you should expect super-high interest rates and unfavorable terms in an overall sense.
If you have hopes of obtaining a mortgage, you are faced with an uphill battle – at least at the start.
Generally speaking, for a conventional mortgage you will have to wait four years after filing Chapter 7 and two years after Chapter 13. This may sound like a long time, but during this period you should concentrate on improving your credit rating. This will show lenders in the future that you are serious about doing things the right way the next time around.
All in all, bankruptcy is going to have a negative impact on your credit rating. But remember this: going through this process can help you reorganize your financial life, allowing you to reach goals in the future that you would have otherwise never been able to obtain.