Credit Advice

How do I know when its time to file bankruptcy? With a credit score of 496 and no realistic options for paying off my debt, is it better to file now?

Surprisingly, the answer is yes. For some people credit scores actually increases after a bankruptcy.

Consumers who are on the verge of bankruptcy already have poor credit with late payments, high balances, and charged off accounts or collections accounts. When an individual declares bankruptcy, many of the collections and high balances are wiped clean leading to a potential increase in credit scores. But remember these scores are already significantly depressed so don’t look at bankruptcy as a way of increasing your score.

realsugar is totally right.

However, just because your credit score is up, doesn't mean you're in good credit standing. Despite a decent credit score, when lenders and issuers see a recent bankruptcy in your credit history, you can likely still be denied credit or a loan, or offered sky-high rates.

If you want some help fixing your credit, check out CK's blog post on fixing credit after bankruptcy.. http://blog.creditkarma.com/credit-scores/dear-credit-karma-fixing-credit-after-bankruptcy/.

There's still hope for you and your credit score.