Can Bankruptcy Discharge of Debt Help My Credit?

Studies by Harvard and the Federal Reserve show that people who file bankruptcy and generally in a better position than those who remain in debt. 

Read this article by Attorney Peter Francis Geraci titled “Can Bankruptcy Discharge of Debt Help My Credit?” and more at

Studies by Harvard and the Federal Reserve show that people who file bankruptcy and generally in a better position than those who remain in debt.  The Federal Reserve said, 

“[people who file bankruptcy] experience a sharp boost in their credit score after bankruptcy, whereas credit scores recover at a much slower pace for individuals who remain [in debt]. 

The credit score of bankrupt individuals exceeds the credit score of insolvent individuals by 40-80 points. In addition, those who go bankrupt open new unsecured accounts post-bankruptcy at a higher rate (by around 15 percentage points) than those who don’t file bankruptcy, while the number of inquiries is very similar across the two groups.

This indicates a difference in access to credit, not demand for credit. [The Federal reserve] conclude[ed] from this evidence that the ability to file for Chapter 7 bankruptcy is associated with better access to credit, and while both insolvency and bankruptcy are forms of default, the debt discharge associated with bankruptcy leaves filers in a better financial position than individuals who become insolvent in similar circumstances.”

If you are contemplating bankruptcy, you have probably received charge cards in the mail, and bought things with no money down. After a bankruptcy, that easy credit will be harder to get. Most times, you can get a charge card by giving a $400 or more savings account with the issuing bank, so that if you do not pay the charge card, they can deduct from your bank account.

Many clients may be able to buy a home within a few years after filing a bankruptcy or even during a bankruptcy. How do I know? Every week an old client calls me and asks for proof that their bankruptcy got rid of their old bills, so they can give it to their mortgage company. Mortgage companies want to know that people buying houses don’t have creditors chasing them, because those creditors can put liens on the house. Also, if you have a lot of bills to pay, you probably can’t afford house payments. Filing bankruptcy may be the first step to buying a house.

Geraci Law makes it easy for you to apply for mortgages and credit.  We post your filed bankruptcy petition on your Client Corner so you can log in and get it when you need it.  We provide you with any help you need to show that you got out of debt.

Dial 1-800-CALL-PFG for a free phone mini-consultation, or make an appointment online 24/7 at  Bankruptcy laws are in place to help you.  Who knows bankruptcy like Geraci Law?  Geraci Law has 30,000 5-star reviews 5starsince November 2016!


Author: Elizabeth Doren Paralegal at Geraci Law L.L.C.

I am a paralegal at Geraci Law L.L.C. (the greatest consumer bankruptcy law firm that ever was or will be!) I talk to thousands of people who are struggling financially.

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