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Bankruptcy does NOT hurt your credit!

Let's repeat that. Bankruptcy does NOT hurt your credit.  Not paying your debts is what hurts your credit.  If you CAN pay all your bills...you should pay all your bills. Bankruptcy affects the four "C's" of credit to varying degrees: CAPACITY This means that you have sufficient income to afford the payments that would be required on a new loan or credit card account. Your credit capacity is actually improved by bankruptcy because your debts have been reduced. CAPITAL This refers to your overall level of wealth. A lender wants to know that you have sufficient financial assets to repay the debt. The impact of bankruptcy on your credit capital will depend on the type of bankruptcy you chose and the type of assets you owned. COLLATERAL This refers to your assets that could be or are pledged as security on a debt. Since few assets usually remain after Chapter 7 Bankruptcy, you can build a savings account for use as collateral or take out a loan to buy an item that can serve as collateral on the loan. CHARACTER Bankruptcy takes the greatest toll on your credit character. Understandably, lenders will be very cautious in the future about granting credit to you. Over time, with careful financial management, you will be able to rebuild your credit reputation.