Bankruptcy does NOT ultimately have a negative effect on your credit in the long run. Chances are, your credit score is already poor if you’re in financial distress. By writing off the delinquent obligations, your credit score has nowhere to go but up. Before bankruptcy, you probably don’t qualify for a mortgage or refinance of a mortgage. Two years out of bankruptcy, most people are able to qualify — which isn’t the case before bankruptcy when you have a lot of active collection accounts or large financial obligations you can’t meet.
That said, you need to keep a close eye on your credit report in the weeks and months following your bankruptcy proceedings. This is primarily to ensure that the report is accurate and reflects the debts that have been discharged by bankruptcy. These discharged debts and outstanding accounts will no longer apply to your credit report in terms of late payments and other negative marks.
For more advice on Denver bankruptcy issues or to schedule an appointment for a consultation, please contact us 24/7 to send a confidential email inquiry.