If people have been telling you that bankruptcy ruins credit, then it is your turn to set them straight. Bankruptcy may mean admitting that you have more bills on your desk than money in your pocket, but it does not mean that your credit is ruined forever.

Credit is Different than Credit Report

People are constantly confusing these two things. Yes, your credit report will be impacted when you file bankruptcy in Kentucky, but the damage eventually disappears. With Chapter 7 filing, the bankruptcy will appear on your credit report for 10 years. With Chapter 13 bankruptcy, it will appear for 7 years.

Credit merely reflects your ability to borrow money. Though creditors might be able to see that you filed bankruptcy, they will also see you have far less debts than before. Therefore, you are actually making yourself a better candidate for receiving credit by filing bankruptcy because it means your delinquent account statuses have been removed and you will have more funds to put towards new credit instead of continuing to drown in your current debts.

Other Factors in Credit

Fortunately, bankruptcy is not the only factor involved in forming your credit report. Other elements considered are how many accounts you have open, how many times you have applied for a credit card, and how many times you have been denied a credit card. The report also takes into account how often you have been late on payments and how much debt you have.

As you can see, bankruptcy is one on a list of many factors that create your credit score. Bankruptcy is also a vehicle that erases the damage done by high balances and delinquent accounts. Contacting a bankruptcy attorney can help you better understand these issues and how your future purchasing power is affected.