Let’s clear this up: for most people I meet, their credit is already damaged, often beyond repair unless something changes. And until the debt is dealt with, their credit score isn’t going anywhere.  For most of the people I meet with, their credit score is like this dead tree in the picture.  It does not matter how many times you water this tree……..it is dead.  It does not matter how many times you cry over this tree.  It is completely dead.  Most of the people I meet with need to forget about the dead past and focus on growing something completely new.

 Bankruptcy, particularly Chapter 7, gives them a fresh start—one that often leads to a higher credit score within a year.

Let’s break this down.

Does Bankruptcy Destroy Your Credit Score?

The most common fear about bankruptcy is that it “ruins your credit.” While it’s true that filing will cause a temporary dip in your score, the full story is more encouraging.

If your credit score is already in the 500s or low 600s due to missed payments, collections, or charge-offs, then bankruptcy might be the first step toward actual improvement. Bankruptcy stops the bleeding and wipes out unsecured debts that are keeping your credit stuck in the mud.

Can You Rebuild Credit After Chapter 7 Bankruptcy?

Absolutely. In fact, many of my Chapter 7 clients see their credit scores rise to around 700 within 12 months of discharge. No, it’s not guaranteed—and not everyone rebounds at the same pace—but the key is this:

Without bankruptcy, your credit won’t recover. With bankruptcy, it at least you move in the right direction by clearing out the dead debt.

Once the debts are gone, your credit report stops showing delinquent accounts piling up. And as you start managing new credit responsibly (secured cards, small loans, etc.), the score begins to recover.

How Long Does Bankruptcy Stay on My Credit Report?

Chapter 7 bankruptcy stays on your credit report for 10 years from the filing date. Chapter 13 stays for 7 years. But here’s the reality:

• Delinquent accounts and charge-offs stay on your report for 7 years too.
• Even without bankruptcy, those negative items drag your score down the entire time.
• After a bankruptcy discharge, lenders see you as less risky, because you’re no longer buried under unpayable debt.

It’s not the mark of bankruptcy that holds you back—it’s the unresolved debt and financial chaos that’s worse in the long run.

Why Is My Credit Score Already Low Before Bankruptcy?

Most people come to bankruptcy because they’ve been missing payments, their credit cards are maxed out, or accounts have been sent to collections. All of these events cause your credit score to drop significantly, sometimes by 100 points or more.

You may think you’re “protecting” your credit by avoiding bankruptcy, but if the damage is already done—and worsening—you’re just delaying your financial recovery.

What Happens to Your Credit After Filing Bankruptcy?

Here’s the usual path:

1. Bankruptcy Is Filed

Collections stop. Lawsuits and wage garnishments stop. Your stress starts to ease.

2. Your Case Is Discharged (in about 90 days for Chapter 7)

Your unsecured debts—credit cards, medical bills, personal loans—are eliminated.

3. Your Credit Score Stabilizes, Then Improves

Within a few months of discharge, your credit score begins climbing—if you manage new credit wisely.

4. You Receive Credit Offers

It may surprise you, but you’ll likely start getting credit card offers again. Use these strategically. Secured cards are especially helpful tools to rebuild your credit profile.

5. You Qualify for Auto Loans or Even a Mortgage

Most people can qualify for a car loan within 6–12 months post-bankruptcy. Many qualify for an FHA mortgage just 2 years after Chapter 7.

Is It Better to Struggle With Debt Than File Bankruptcy?

This is a tough pill to swallow, but here’s the truth:

If you’re drowning in debt, your credit isn’t going to get better until the debt is gone.

Making minimum payments on $30,000 in credit card debt might make you feel like you’re staying afloat—but it won’t restore your credit. Lenders look at your debt-to-income ratio, credit utilization, and payment history. If those are all working against you, no amount of effort will fix your score without eliminating the debt.

How Soon Can You Start Rebuilding Credit After Bankruptcy?

Right away. Here’s how many of my clients rebuild successfully:

• Apply for a secured credit card 1–3 months after discharge.
• Use it sparingly (under 10% of the limit) and pay in full each month.
• Monitor your credit report for accuracy—make sure discharged accounts are marked correctly.
• Avoid new debt unless it’s strategic—like a small car loan that you can easily afford.
• Set up autopay to never miss a due date again.

Stick to these habits, and your score will start to rebuild faster than you think.

How Long Until I Can Buy a House After Bankruptcy?

Many people assume homeownership is off the table after filing bankruptcy. Not true.

• FHA loans typically allow you to apply two years after Chapter 7 discharge.
• VA and USDA loans also allow for shorter waiting periods.
• Conventional loans may require a 4-year wait—but credit score, income, and other factors can play a role.

The key is this: if you don’t file bankruptcy and can’t get ahead of your debt, you may never qualify for a home loan. Filing gives you a timeline, a process, and a path to rebuild.

What Are the Mental and Emotional Benefits of Bankruptcy?

Credit scores aren’t everything. One of the most underrated benefits of filing bankruptcy is the relief it brings.

I’ve had clients cry in my office—not from fear, but from hope. They’re no longer juggling bills they can’t pay. No longer facing constant calls from collectors. No longer dreading what tomorrow will bring.

Bankruptcy doesn’t just fix your finances—it can restore your peace of mind.

Is Bankruptcy Right for You?

If your debt keeps growing…
If your credit score is stuck in the 500s…
If you’re only making minimum payments…
If you’ve tried everything else…

Then it’s time to face the truth. Bankruptcy may be your best option.

You can continue down a road that leads to more debt, more stress, and no real improvement in credit—or you can hit the reset button and start fresh.

Final Thoughts: Don’t Let Fear Stop You From Starting Over

If you’re afraid to file bankruptcy because of what it might do to your credit, let me ask you this:

• Has your credit improved in the last 6 months?
• Are your debts shrinking—or growing?
• Can you qualify for new credit right now?

If the answers are all negative, then it’s time to stop worrying about “what if” and start focusing on “what now.”

Bankruptcy is not the end. It’s a beginning. And in most cases, it’s the only way to restore your credit and rebuild your life with dignity.

Ready to explore your options?
Call the Law Office of Jeffrey B. Kelly today. We’ll walk you through the process honestly, with no pressure—just straight answers about whether bankruptcy is the right tool for your situation.

Here are some details on how to eliminate credit card debt efficiently and quickly.

Create a budget

A budget is a detailed plan for how you will spend your money. Most people can look at their paycheck and figure out how much income they receive every month. Taking this amount, you can look at every cost in your life and figure out what you need to spend on and what you don’t.

Certain bills like rent (or mortgage), utilities, and various types of insurance are a necessity and typically have a set cost per month. Once you figure out those costs, you can figure out how much is left for other areas and start planning around the money you have left. Are there any foods you typically buy that can be purchased for a lower cost? Could you downgrade the internet, tv, or phone services to save money? Look into every area of your life where you can cut costs.

Once you have found some extra cash, be sure to set it aside for paying off your debt. The more you have available to pay the debt, the quicker it will vanish from your life.

Pay off high-interest rate cards first

Every credit card has different rules and rates. Look at your card’s agreement or call the company to find out what your annual percentage rate (APR) is for each card. Then, be sure to pay off the card with the highest interest rate first until that debt is wiped out. Even if all you can afford are minimum payments, it is worth paying down the highest rate card first.

When you hold a debt on a high-interest card, it creates more interest than the other cards. This is just more fees for you to pay, so it’s always a good idea to try paying off the balance of these cards before any others. While your other cards may go unpaid, at least the amount of interest accruing on them is less than if you failed to pay off the higher rate card.

Get a new credit card with 0% APR and do a balance transfer

Even when you are deep in credit card debt, you can sometimes get another card. Search around for a balance transfer credit card that offers an introductory 0% APR rate. These cards allow you to move the balance you have on another card onto this new card. Once your debt is on this new card, it will incur no interest for the length of time mentioned in the offer.

This is a great way to give yourself time to pay off your debt. Instead of paying a high-interest rate every month to the card issuer, your credit card balances will sit on a 0 percent interest card, allowing your monthly payments to go toward the debt itself, not just interest. If you can put all of your credit card debt on a 0% APR card, even better.

Another bonus: Many credit cards now offer points for every purchase you make. Each point typically equates to one cent and can be cashed out for payment toward the credit card. Basically, the credit card company gives you one percent cash back on your purchases. It may not be much, but it can add up quite a bit over time.

Reach out to a lawyer for debt consolidation

Law firms like Jeffrey B. Kelly specialize in helping people pay down their credit card debts. A lawyer can speak on your behalf to the creditors and garner a deal for you to pay a much smaller amount of your debt rather than the whole thing. They can also help lower your interest rates so you can make higher payments on the principal balance of your credit cards.

Law firms that specialize in debt consolidation understand your situation, so they make sure to charge reasonable rates for their service. Most of the time, they are able to lower your overall cost enough to make up for any fees incurred by hiring them for debt consolidation. In the end, you save much more money when you work with a firm like Jeffrey B. Kelly.

Learning how to eliminate credit card debt is easy, but doing it can be tough. Luckily, there are many ways to handle it. With a bit of financial planning, paying off the right debts at the right time and reaching out for legal help to consolidate, you can wipe out your costs quicker than you may think.

Most importantly, get started as soon as possible. The longer you wait to tackle your credit card debt, the harder it will become to get out of it. If you start now, you will be one step closer to financial freedom.

Yes, you can freeze your credit while you are in an active Chapter 13 bankruptcy. There is nothing in the bankruptcy code that would prohibit freezing your own credit.

This past week, we have received many calls from concerned clients asking this question in light of the recent Equifax data breach.  The Atlanta based Equifax credit reporting agency recently announced that as many as 143 million people may have had their social security numbers and birth dates released to hackers in the breach.

If you would like to know if you are affected by the Equifax data hack, you can go to this website.  If you have been a victim of the breach, Equifax will give you one free year of credit monitoring.

WSB Consumer Expert Clark Howard recommends that the best way to protect yourself is to freeze your credit with Experian, Transunion, and Equifax.  Here is a link to Clark Howard’s page.

What is a credit freeze?

A credit freeze is basically a lock or a seal on your credit report.  The only way to open it is with a pin number that will be issued to you by the credit reporting agency.  If you lose the pin, you could be in big trouble if you ever need quick access in the future.  If you have a credit freeze in place, identity thieves will not be able to establish new credit in your name using your credit reports even if they have your personal information.

Here is how you can contact Experian:

• Online: Experian Credit Freeze Link.
• By Phone: 1-888-397-3742
• By Mail:  Experian Security Freeze
  • P.O. Box 9554
  • Allen, TX 75013

Here is how you can contact Equifax:

• Online: Equifax Credit Freeze
• By Phone: 1-800-685-1111
• By Mail:  Equifax Security Freeze
  • P.O. Box 105788
  • Atlanta, GA 30348

Here is how you can contact Transunion:

• Online:  Transunion Credit Freeze
• By Phone: 1-888-909-8872
• By Mail: Transunion LLC
  • P.O. Box 2000
  • Chester, PA 19016

Personally,  I think this disaster for Equifax will mark the end of the day and age where we use social security numbers and birth dates to access credit.  I have no idea what the new system will be but the old one is now useless.

Reminder to all my clients:  While you are in an active Chapter 13 case, you are not supposed incur any new debt without permission from the court.

If you are sending a certified letter, this is how is should read:

Dear ______(name of credit agency):

I would like to put a complete freeze on my credit.  My full name is ________.  My birth date is ______.  My maiden name is _____.  My current address is ____.  My prior addresses are ____.  My social security number is _____.  My Drivers license state and number is _____.  (You will need to check with each agency to find out how much they will charge you for the freeze).

__________ signature and date.

Chapter 13 and Chapter 7 bankruptcy are great tools for lightening a person’s debt load.  With both chapter 13 and Chapter 7, you can eliminate medical debt, credit card debt, and other types of unsecured debt.

Shrinking your debt can be critical to your financial and emotional health.  If the load gets too heavy, something will have to give.

Heavy debt loads can lead to garnishments, collection lawsuits, foreclosures, and car repossession.

How much weight can you carry?

How fast will your debt grow if you do not deal with it?

Compound interest is one of the great wonders of the world.  It can work for you or against you.  When it works for you, life is good.  When it works against you, every day just feels like it is getting heavier and heaver.  The load on your back grows larger and larger.

May people do not know that their credit card company may be charging them interest that compounds daily.  Allow me to illustrate the pain.

Let’s say you owe $20,000.00 on your credit card.  Let’s say your annual interest rate is 25 percent (most of my clients have credit card interest rates that are higher).  A 25 percent annual interest rate would be .00068493 if calculated daily.  Mulitply $20,000 times 0.00068493 and you get $13.6986 per day!

Perhaps you might be asking yourself, “Is $13.69 per day really that much money?” But here’s the catch with compound interest:  you actually get charged interest on your interest fees!  Using the example from above, on day 1, your balance is $20,000.00.  On day two, your balance is $20,013.69.  On day three, your balance is $20,027.40 (you are now paying interest on interest).

Let’s do the match over a year.  A $20,0000 debt with an annual interest rate of 25 percent compounded daily over a year will equal $5,678.31.  A person with this amount of debt has to pay $5,678.31 per year to their credit card before they can even start chipping away at the $20,000.00 balance.  If the interest does not get paid, then total debt will just keep on rapidly growing.

Money Chimp has a great compound interest calculator.  If you would like to play with it, click here.

Don’t let compound interest break your back.  Start shrinking your debt load today.  If you live in Georgia, please feel free to call my office at 770-637-1756 if you would like to set up a free consultation.  Also, you can fill the contact form to the right.

We have office locations in Marietta, Kennesaw, Dallas, Dalton, Cartersville, and Rome.

Other Posts you might be interested in reading

1. What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

4.  Stop Garnishment

5.  Stop Foreclosure

6.  Secrets from the debt collector’s playbook

7.  Top 10 Myths About Bankruptcy

Just this past week, I was helping my bankruptcy client in Rome, GA get prepared for her 341 Meeting of Creditors when she pulled out this scam letter. “Is this real?” she asked. “Should I cancel my Chapter 13 bankruptcy case and pursue this opportunity?”

On its face, the letter looked official. The scam company has a Pennsylvania Avenue address in Washington D.C. The company name makes it sound like they are a division of the United States Government. The letters says it is “Personal and Confidential.”  It states that a case number has been assigned to the recipient.

The scam letter states, “Your Revolving Consumer Debt and Credit Card Payments are eligible for hardship programs benefiting from the enactment of the Economic Stimulus Act of 2009.”  (FTC testifies on efforts to stop fraud).  The scam continues, “this program is not associated with bankruptcy, credit counseling, or debt consolidation; it has been specifically designed to assist consumers eliminate up to 50% of outstanding credit card debt and secure one low monthly payment.  This program is available for a limited time so please call as soon as possible.”

With a quick read of the letter, I immediately knew it was not real but I asked her to let me take it back to my office and do a little investigation.  After I got back to my Rome office, I googled the name of the company.  In the search results, there was story after story about the scam that this company is trying to pull off.

These scam letters really make me angry.  You may hear about the promises of these letters and think to yourself, “Who would ever actually believe this stuff?”  When people are under the stress of debt pressure, they are often easy prey for con artists.  What surprises me is how bold these crooks have become.  Using the United States mail system to perpetrate a crime will eventually land these con artists in jail.

If you receive a similar letter, let your bankruptcy attorney review it with you.  If your bankruptcy attorney agrees that its a scam letter, let him forward it to the United States Trustee.  In Georgia, the U.S. Trustee prosecutes these types of scams.

Other Posts:

1. What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

4.  Stop Garnishment

5.  Stop Foreclosure

6.  South Carolina Bankruptcy Attorney Blog

Even if the surviving spouse was an authorized signator on the credit card account, she is still not liable for the debt. You don’t have to sign a contract to have a credit card issued to you that is in another person’s name. For example, as an employer, I may decide to have a credit card for the office issued in the name of my office manager so that she can keep the office supplies stocked. If my business goes under, she can’t be forced to pay the debt because she never signed a contract with the credit card company.

When a credit card company demands payment from Mom for Dad’s credit cards, ask the company for a copy of the written contract. Tell them that you want to see where Mom signed it.  In Georgia, marriage by itself does not make you liable for your spouse’s debts.

If it turns out that Mom is liable and she is unable to pay the debt, she should meet with a bankruptcy attorney to go over Chapter 13 and Chapter 7 bankruptcy.

There are exceptions to general rules. For you to truly know the answers for your specific situation, you should meet with a bankruptcy attorney so that they can see the entire picture.

Other Posts:

1. What is Chapter 13?
2. What is Chapter 7?
3. How much does it cost to file?

By telling my client that he could not file for bankruptcy, the representative from the debt management company broke the law by engaging in the unauthorized practice of law.  Some debt management companies will say just about anything to get your money.  Don’t let some debt management company scare you away from exercising your rights.  Meet with a real attorney and find out about your legal options to obtain real debt relief.

Here is the truth about debt management companies.  Credit card companies are not legally stopped from suing you for collection of the debt.  In contrast, Chapter 13 and Chapter 7 prevents credit card companies from suing you for collection.  Debt management companies have no power to force any creditor to accept a lower payment from you.  In contrast, a confirmed Chapter 13 plan payment or a Chapter 7 discharge is binding on all creditors listed in the case.  With Chapter 13 and Chapter 7 we don’t need permission from your creditors.

In the event you need to file bankruptcy, credit card debt can be wiped out if necessary.  Even in a Chapter 13 plan where you are paying back all of your debt, the interest rate paid on credit card debt is zero.  In contrast, the most common way to get rid of your second mortgage in a Chapter 13 or a Chapter 7 is to surrender the house to your creditor.  To keep the house, all payments must be made on the second mortgage.

Why would you ever want to exchange a type of debt that can be wiped out or paid back at zero percent interest for a new type of debt that must be paid back with interest and could result in the loss of your house if you ever get into a position where you can’t make the payment?

One of the most common mistakes I see people make is that they will borrow against their 401K to pay off credit card debt or medical debt.  Within a short period of time, they realize that they are not going to be able to make the 401k loan payment.   Trying to get by, they skip other important bills like car payments and house payments.  Then, they come to my office to file Chapter 13 to save the house and car.  The reason I feel so bad for these people is because we could have wiped out the credit card debt and the medical debt in a Chapter 13 or a Chapter 7 but now we are stuck with this 401k payment that they cannot afford.

Defaulting on the 401k loan is a bad idea because of the tax penalties. When a person defaults on a 401k loan, they will have to pay the government taxes that they otherwise could have completely avoided if they had never taken out the 401k loan to begin with.

I recently met with a couple from Dallas GA who had about $50,000.00 save up in their 401k. After the husband lost his job, they slowly borrowed against the 401k to make payments toward their credit cards and other living expenses. Unfortunately, they did not come to see me until they had exhausted all of their 401k. Not only did they no longer have any money in their 401k but they also now had over $20,000.00 in tax penalties for the withdrawal. If they had been in a position to pay back the 401k loans, there would have been no penalties. Unfortunately, the husband was not able to find another job.

Your 401k is meant for your retirement.  Don’t ever treat it like an emergency fund.

Other Posts:

1. What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

4.  Stop Garnishment