By William Frazier
Which is better for your fresh start?
I hear from a lot of people trying to figure out what is the difference between credit repair and bankruptcy.
They have no idea which one will be more beneficial for their needs.
The 1st question to ask is are you being garnished? If so you should know that credit repair won’t stop the garnishment but bankruptcy will depending on who is garnishing.
Another important fact is that credit repair doesn’t take away your legal obligation to pay anyone you owe money to. It does keep creditors and other entities off of your credit report who aren’t compliant with laws that allow them to place information on that report.
This ultimately helps improve your score.
The Different Ways They Affect Negative Accounts
Lets say you have a charged off credit card on your report that shows $800 balance, $700 credit limit, $1000 past due amount, and showing 30, 60, 90, and 120 day late payments.
Each of those 4 late payments hurts your score, the balance being higher than the credit limit hurts your score, the payment status of “charge off” hurts the score, and the past due amount hurts your score.
Bankruptcy will pay off this account but leave it on your credit report. So the balance would be $0, and the past due amount would be zero but the late payments will remain and payment status might change.
Payment history accounts for the biggest piece of your score 35%. So leaving those late payments still hurts you big time.
Credit repair would remove the entire account leaving none of the negative factors to affect your score.
Amount Of Time Each Process Takes
Bankruptcy takes 7-10 years before it can be removed from the public record section of your credit report. Public records hurt your score.
Sometimes after 2 or 3 years of chapter 7 you can apply for new credit but you have to finish your payment plan to do the same with chapter 13.
On average credit repair takes 6 months. Sometimes it can take up to a year and sometimes it can be completed faster than 6 months. Every situation is different.
Hopefully, this information helps you come to a sound decision. If you are still confused please contact us so we can help assess your situation. 334-430-5296
