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Bankruptcy Can Actually Improve Your Credit Score
An excellent new study by the Federal Reserve Bank of New York examines the effects on households resulting from the 2005 change in bankruptcy laws. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was signed into law by President George W. Bush. One of the surprising conclusions from the report is that bankruptcy can actually improve your credit score. Check out this graph. It tracks the credit scores of people who file bankruptcy, and those who decided not to file bankruptcy.
I have written before that bankruptcy will not kill your credit. The N.Y. Fed report takes this a step further: “The individuals who go bankrupt experience a sharp boost in their credit score after bankruptcy, whereas the recovery in credit score is much lower for individuals who do not go bankrupt.” This may seem counter-intuitive, but the conclusion of the study is clear: bankruptcy can actually improve your credit. In addition, the study, found that “insolvent individuals who do not go bankrupt exhibit more financial stress than those who do.” To be sure, dealing with the stress of bankruptcy can be unnerving. But putting it off or avoiding it altogether is a lot more stressful.
Bankruptcy Can Actually Improve Your Credit Score
If you are in a position in which you know that it is going to take a very, very long time to repay your creditors, you should consider filing bankruptcy now. Putting off the inevitable will only delay the benefits of filing, further erode your credit score, and cause you stress. Most of my clients know when it’s time to file. You may not be sure whether bankruptcy is the right financial choice for your specific circumstances. Call my office and schedule a free consultation.
They Called. They're Glad They Did.
Brian Lee from Lee Legal was an amazing attorney to work with. He took his time, reviewed my documents and we discussed my situation thoroughly. He explained the process and my options as well as gave his recommendation. Not only did he assist, but he ensured that I knew this...
I was very nervous and scared about going through this process. But Brian was very knowledgeable and helped me through it. I was notified about any and all updates to my case and he was very responsive when I had questions regarding any concerns I had. Although a bit nerve...
Brian provided me with a very detailed analysis about my potential case after our first consultation. He promptly responded to all my complex questions, especially navigating student loans and some tax discussions. He is very professional and experienced at what he does, I would...
I've had the pleasure of working alongside Brian V. Lee for several years, and I can say without hesitation that he is one of the most knowledgeable bankruptcy attorneys in the DMV area. Brian's command of Chapter 7, 11, and 13 practice is exceptional, and his clients in the DC...
Brian has the amazing talent of taking complicated legal matters and distilling them down to seamless, frictionless resolutions. He is a phenomenal problem solver and a trusted advisor.
Brian is both warm and professional. He helped me navigate a financial issue that I had not been looking forward to working on and he made the entire experience non-stressful, receiving a lot of anxiety I had around the matter. He is straight forward and a fantastic problem...
I had the opportunity to work with Brian at a time when I was challenged by a professional setback and forced with the challenge of making some very difficult legal decisions. Additionally, I worked with him again as I was dealing with some financial issues pertaining to my...
Still several years from Public Service Student Loan Forgiveness and saddled with significant student loan payments in proportion to my income, I came to Lee Legal to explore the bankruptcy path. Through his counsel, Brian took the fear out of the process and helped me to...
