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How A Bankruptcy Filing Affects Your Credit Score in Carbondale & Marion, IL

If you think bankruptcy will ruin your credit score or that it will cause you to not be able to qualify for a loan - think again. The evidence is just the opposite. Our attorneys at Bankruptcy Advocates can explain why that isn't true, but a study from The Federal Reserve Bank of New York provides a quick comparison between two groups of people.

Both groups were insolvent - meaning the sum total of all their debts was greater than the total value of all their assets (assets = everything they own, from real estate to bank accounts, cars, furniture, etc.).

One group filed for relief under the Bankruptcy Code and the other did not - instead they just did the best they could, struggling along trying to make payments or negotiate deals to repay whatever debt they could.

Results Of The Study

Here are the conclusions* of the study:

  1. People who filed for bankruptcy were offered and opened more new unsecured accounts than those who did not.
  2. Those who filed for bankruptcy saw a sharp boost in their credit scores whereas the credit score recovery was much lower for those who did not file bankruptcy.
  3. People who did not file for bankruptcy relief often wasted money they held in retirement accounts to try to catch up on debts. (People who file for relief in bankruptcy are almost always allowed to keep their retirement funds.) If those retirement funds had been kept and allowed to grow with normal interest and dividends, the amount lost by retirement age could be staggering. A cited example was $23,231.12 taken out of a retirement account at age 25 and used to pay debt would have been worth $1,247,526.55 if left alone until retirement at age 70.

More Than 30 Years Of Bankruptcy Experience

In order to avoid blunders such as this, the best thing to do is talk to a knowledgeable bankruptcy attorney first to see what the best option is for you. And remember, your creditors always know first when you are having financial difficulty-because they don't receive your payments on time. So as soon as you are late with a payment, they report that to the credit bureaus and your credit score is already negatively affected.

Because bankruptcy provided you with a 'fresh start' your credit score can begin to improve immediately because you no longer have any debt and creditors know that you won't be able to file another bankruptcy for many years, due to the limits of the Bankruptcy Act.

Our attorneys at Bankruptcy Advocates have decades of experience helping people just like you here in Southern Illinois with their bankruptcy cases. We can help you figure out which solution will work for you. Call our bankruptcy attorneys in Carbondale, IL today!

Contact Us Today

Bankruptcy provides real debt relief and a Chapter 7 can do so in as few as 6 months. Call our Carbondale office at 618-549-9800 or fill out our convenient online contact form to make an appointment with our experienced bankruptcy attorneys.

*Summarized by Marcus H. Herbert. The information for this report was taken from an article titled "Scared to File for Bankruptcy? The Alternative Could be Worse" by Steve Rhode of, published March 2, 2015, on

We are a debt relief agency. We help people file for debt relief under the U.S. Bankruptcy Code.