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New Study Shows That Bankruptcy Can Improve Your Credit!

Posted on Apr 21, 2015

As reported in The Wall Street Journal, a new study from the Federal Reserve Bank of New York has shown a positive outcome beyond discharge for those who have filed bankruptcy: it actually improves your credit score and access to credit!

One fear many of my clients have is what filing bankruptcy will do to their credit. But in most instances their scores are in the 500s and are not going to get any better unless they file, since paying back the debt is not possible. I have even had clients report to me a bump in their scores after their case was over.

My Credit Score Can Go UP After Bankruptcy?

Now, this study reveals that improvements in credit scores is normal!  The study, as quoted by the Journal, stated,

"Financially troubled individuals are more likely to have less access to new lines of credit and display lower credit scores than those who file for bankruptcy. . . . For example, within three months of seeking bankruptcy protection, people who filed for bankruptcy had better credit scores–by 40 to 80 points–than insolvent individuals who didn’t file for bankruptcy."

In essence, the study revealed that filing bankruptcy is associated with better access to credit, and that the bankruptcy discharge leaves people in a better financial position!

A large debt load can be like an actor around your leg; it keeps you (and your credit score) from floating upwards. People who do not file are left to drown in their current debt and to be denied access to newer, needed debt, like a mortgage or a car loan. Bankruptcy does help the people that really need it, and it is nothing to be feared or avoided.

So What Should I Do?

If you live in southern New Jersey and are weighed down with debt that you simply cannot repay, please feel free to call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss whether bankruptcy is right for you.

If you have more questions about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.

If you are looking for more information on how bankruptcy might help you with your divorce, then you should download my free book, Top Questions Divorcing Couples Ask About NJ Bankruptcy.

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Steven J. Richardson
Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.