This is an important topic, and Chapter 7 can definitely help with your credit rating. In fact, I believe there are 3 things filing Chapter 7 can help to accomplish, though they are different for different people in different situations.
- To give you a more workable monthly budget.
- To protect you from harassment now and lawsuits, wage garnishments, etc. later.
- To re‐establish a good credit rating.
I understand that this last item is surprising to most people. It is a very reasonable question to ask, as so much in life depends on your credit rating. It seems everyone kicks you when you’re down if you have a bad credit score, from paying too much interest, too much on security deposits, difficulties in renting places to live or applying for jobs, and even giving you higher house and car insurance premiums. It’s just not fair that those that can afford it the least, end up paying the most.
Luckily, your credit (or FICO) score will improve in most situations, even immediately after the bankruptcy case. That’s because your payment history no longer drags you down, and you have a better debt to income ratio. After a case is over, we often give advice on ways to boost your credit score even more than it will do by simply filing your case – which it does by itself!
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