Bankruptcy does and always will have a negative impact on a person's credit report. Under the current bankruptcy law, a person who files for bankruptcy can expect it to remain on their credit report for 10 years.

However, for some people bankruptcy can have a positive impact when seeking a mortgage. If a person owes more then they can ever pay or has judgments on their credit, then it will be very difficult for them to get a conventional mortgage. Nevertheless for those who (as a last resort) turn to bankruptcy often find mortgage companies offering them loans. There are many reasons for this, among them, is the fact that a person who owes no other creditors (debts discharged in bankruptcy) is more likely to be able to pay their mortgage.

One should always keep in mind that bankruptcy is a tool of last resort and should never be used otherwise. Additionally, if are considering filing for bankruptcy you should always seek advise from an attorney who practices in the area of consumer bankruptcy law. Never get your advice about how to handle your debt from a company you owe money to or one that wants to loan you more. Under the bankruptcy code, an attorney who practices bankruptcy must give a potential client a list of disclosures and list themselves or firm as a "debt relief agency."

Learn more about this author, J. Marty Hyatt.
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