Love, hate, and credit reports

07 Feb Love, hate, and credit reports

One of the most frequently asked questions by those considering filing bankruptcy is “what will it do to my credit report?” Often this is followed by, “I have perfect credit.” I often reply, perhaps injudiciously, “What’s so perfect about having debt that you can never hope to repay short of winning the lottery?”

I try to focus attention on the balance sheet:

  • what do you own,
  • what do you owe, and
  • what do you have to live on.

Get those things in order, and “good credit” will follow. I find it intolerable that people would seriously consider living forever in impossible debt without insurance, savings or retirement to preserve their credit report. They have been brainwashed to think that their future credit worthiness is so important as to cut off consideration of getting a fresh start.

However, as the use of credit reports becomes more pervasive, it is clear to me that one can’t shrug off the credit report as unimportant. It may influence insurance rates, employment, housing and who knows what else.

I have reconciled these clashing world views as follows: your decision to file bankruptcy should not be made on the basis of its effect on credit reports or credit scores, but one must be vigilant in seeing that the credit report on which others make decisions is accurate.

We’ll see if that construct holds up going forward.

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Cathy Moran, Esq.

I'm a certified specialist in bankruptcy law (California State Bar Board of Legal Specialization) practicing in the San Francisco Bay Area for more than 30 years. In addition to practicing bankruptcy law, I train new practitioners at Bankruptcy Mastery.
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