Regardless of the means by which they seek debt relief, many people will observe some effect on their credit rating as they take steps to rebuild financial strength. But Chapter 7 bankruptcy, Chapter 13 bankruptcy, and debt settlement strategies offer such potent relief to individuals and married couples that this can be merely a speed bump on the road to financial recovery.

For those who, like many Arizona homeowners, have negative equity in real property like a home, investment property or vacation residence, an involuntary foreclosure, loan modification or short sale may be the best way to proceed. A Phoenix debt relief lawyer can help you understand the long-term implications of these options and help you assess which choice meets your unique goals.

A recent study by the Fair Issac Corporation (FICO) took a close look at how mortgage delinquencies impact FICO scores, which are a primary factor in mortgage lending decisions. The study looked at three hypothetical consumers with baseline FICO scores of 680, 720 and 780, and showed an average reduction of about 70 points for borrowers who are 30 days late on mortgage payments.

Not surprisingly, the decrease continues for borrowers who are 90 days late, but the effect is minimal for the borrower who started with the lowest score. However, the most interesting finding was that the FICO score effect was essentially the same for property owners who chose to let the foreclosure process take its course and those who completed a short sale with a deficiency balance (meaning the sale proceeds did not eliminate the amount owed on the original mortgage). Other strategies, such as deed in lieu of foreclosure and debt settlement, had a lesser effect on the credit score.

The study produced similar results when assessing how long it takes for FICO scores to recover. Not surprisingly, it takes considerably longer for a borrower with a higher score to recover from the negative effect of late payments, short sales or foreclosure.

Beyond the limited considerations of hypotheticals, a wide variety of factors play into a proper consideration of whether bankruptcy or another option will best serve an individual’s needs. A consultation with an Arizona bankruptcy attorney can help potential clients make informed choices that target future financial health.

Read more about our bankruptcy services…

Receive a FREE Consultation

Use the form below or call us at 602-456-6085 today. We’re here to help.

    Our Locations

    • Phoenix Office – New Wright Law Offices  2999 N. 44th St., Ste 600 Phoenix AZ 85018  Telephone: 602-456-6085 / 866-703-3287 Phoenix Law Office
    • Phoenix Office – Old Wright Law Offices  668 N. 44th St., Ste 320 Phoenix AZ 85008  Telephone: 602-456-6085 / 866-703-3287 Phoenix Law Office
    • Scottsdale Office  Wright Law Offices  7135 East Camelback Road, Ste 230 Scottsdale AZ 85251  Telephone: 480-845-0145 / 866-703-3287 Scottsdale Law Office
    • Tempe Office  Wright Law Offices  2238 S. McClintock Dr. Tempe AZ 85258  Telephone: 480-845-0145 / 866-703-3287 Tempe Law Office
    • Avondale Office Wright Law Offices  12725 W Indian School Rd, Suite E-101 Avondale AZ 85392  Telephone: 623-258-4480 / 866-703-3287 Avondale Law Office
    • Mesa Office Wright Law Offices  4856 E. Baseline Rd. Suite #104 Mesa, AZ 85206 Telephone: 480-845-0145 / 866-703-3287 Mesa Law Office
    • Glendale Office  Wright Law Offices  20325 N. 51st Ave., Suite 134 Glendale, AZ 85308 Telephone: 623-258-4480 / 866-703-3287 Glendale Law Office

    What our clients are saying…

    TOP Rated PHOENIX BANKRUPTCY ATTORNEY
    Mr. Wright and his staff were amazing. They made a negative situation a lot better and turned it into a positive. Could really tell they care helping people and I will refer their Phoenix Bankruptcy Attorney firm to friends and family. Thanks again.
    Tara
    TOP Rated PHOENIX BANKRUPTCY ATTORNEY
    I called around looking for the right bankruptcy lawyer and came across Benjamin Wright. He personally called me for the consultation seeing how I live in Kingman AZ. He was very helpful from the start and his staff was very friendly and explained any questions I had, sorry for all the questions. I would definitely recommend Wright law offices, and I do!! Thanks for everything, you made what seemed like a hard thing to do simple!! You guys rock!!!
    Steffanie
    TOP Rated PHOENIX BANKRUPTCY ATTORNEY
    Great lawyer, he really helped my mother out of a jam. She was totally new to bankruptcy and he talked with us for about an hour and a half to make sure she wouldn’t be worried.
    Damian
    TOP Rated PHOENIX BANKRUPTCY ATTORNEY
    Ben is a kind and down to earth attorney. He worked around my busy schedule as a single mom (school, full-time job, and daycare pick up and drop off times). He explained absolutely everything to me and was good about e-mailing. I am writing this review as a THANK YOU.
    Shannon
    TOP Rated PHOENIX BANKRUPTCY ATTORNEY
    I had a very positive experience with Attorney Wright. He or his staff returned my e-mails and calls promptly (even after business hours occasionally). His fees were reasonable. He was patient with me when I showed up in court missing an important document. He is aggressive, but fair and nice.
    Jenna