Probably one of my most frequently asked questions. The answer is, bankruptcy isn’t that bad on your credit. The first question I ask people, is how is your credit now? Most people have let their credit slide a bit by the time they have contacted me. Even if your credit is still impeccable, the question is whether you can maintain your current level of debt service.

Credit comes in basically two shades: Good, and not good. And I suppose the “not good” credit can be further broken down into either a) improving, or b) staying bad/worsening. While the bankruptcy may put a ding on your credit, it really won’t be a ding at all if your credit is already bad. The important thing, is that you will start rebuilding, because the further the bankruptcy is behind you, the less and less of a factor it is on your credit, to the point where three years down the road, it will be a virtual non-issue on your credit. It’s basically a financial baptism, where you get a free fresh start and start all over, as if you are 18 years old again, and you can start rebuilding.

I try not to get too hung up on numbers or credit scores, but I’ve heard it said that if your credit is an 800, it will probably get reset at about a 600 after the bankruptcy, and if your credit is a 400, it will probably get reset at about a 600 after the bankruptcy. (Sort of reminds me what John Madden once said about Vikings running back Leroy Hoard: “You need a yard? I’ll get you three. You need 5 yards? I’ll get you three.”)

The worst thing about bankruptcy, is the uncertainty when you start to realize you need to do it, and then the realization that you do, and then asking for help. Once you get past that, it will feel right, and you can rest assured that we can help. In 25 years, no former bankruptcy client has ever contacted me to tell me they regretted the decision to file bankruptcy.