Many clients have asked us about the effects of a bankruptcy on their credit report. Clients often wonder which is worse, a bankruptcy filing or a foreclosure. If you are reading this website, chances are you have been under financial strain that likely has already impacted your credit report.

If you decide to file for bankruptcy, it will be on your credit report for 10 years. In addition, some loan applications and applications for leases include the question "have you ever filed for bankruptcy?" and you would be required to answer truthfully. Unfortunately, sometimes there simply is no other choice than filing for bankruptcy and accepting the consequences. The good news is that most creditors are happy to lend money to people who have filed for bankruptcy, particularly since they know you can't file again for eight years. In addition, by filing bankruptcy, you will likely get discharged from most if not all of your debt, leaving you with a clean slate and a chance to begin rebuilding your credit right away.

In our experience, it is worse to have a foreclosure on your credit report than a bankruptcy. Common sense tells us why this might be: a bank seeing that you have let your house go into foreclosure will think that it could easily happen again. In addition, you probably have other debt that will continue to accumulate. Bankruptcy can often stop a foreclosure, and allow you the time and breathing room you need to actually restore your mortgage or sell your house on reasonable terms.

Because of the current mortgage crisis, it is difficult to predict what credit reporting companies may do in this environment. There are more home foreclosures underway now than there have been at any time since the Great Depression. Bankruptcy will not be the right solution for every housing issue, but it may be right for you. Call or contact us today for a free initial consultation to find out.

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