How does bankruptcy affect my credit? Bankruptcy has a negative impact on your credit, but it’s the road to credit recovery, not a death sentence to your credit. Think for a moment – if you are already behind on payments and debts – your credit couldn’t get much worse than it is now. Bankruptcy improves your credit by getting rid of all the debt that is keeping you down. Your debt to income ratio is hurting you as much as the late payments and no payments. Most people will find their credit will recover within 1 year of filing a Chapter 7 bankruptcy. Believe it or not, you’ll get credit card offers flooding your mailbox right after you file bankruptcy. You could also go out and buy a car right after you file bankruptcy, but you wouldn’t be happy with the interest rate they put on the loan.
Bankruptcy doesn’t affect your ability to get credit as much as it affects the cost of your credit. I have a credit instruction package I give to my clients that gives step by step directions for getting your credit score where it should be, where you can qualify for the better interest rates. So if you’re wondering “Will I ever get credit again?”, YES, you can have good credit again and a lot sooner than you think.