When difficult financial times occur, it can shake your world. But when debt continues to grow and there is no means to address it, it can leave an individual feeling hopeless. While many seek to put off filing for bankruptcy because they are fearful of how it will impact them for years to come, the reality is that the bankruptcy process can be a valuable step to take, especially when it comes to regaining control of your finances or obtaining a fresh financial start.
The impact a bankruptcy filing has on a person’s credit score is dependent on the type they file for. With regards to a Chapter 7 bankruptcy filing, this will remain on one’s credit report for up to 10 years. When one files for bankruptcy, this can cause one’s credit score to instantly drop by 100 points or more.
When one decides to file bankruptcy, eh or she is seeking financial relief. Whether it is from medical debt, credit card debt or the inability to pay the mortgage and other bills due to a job loss or illness, filing for bankruptcy can provide many benefits when it comes to overcoming these overwhelming financial troubles. However, there are some not so advantageous factors to be aware of.
Because one’s credit score can take a major hit by the bankruptcy process, it is important to understand the damage that could occur to one’s credit. Although this is initially difficult to navigate, there is some good news. Bankruptcy will not hurt a credit score forever.
As soon as one files for bankruptcy, he or she could begin rebuilding their credit. This includes making timely payments and applying for secured credit cards. By making on-time payments and keeping the credit utilization rate on a secured car below 30% could have a positive impact on one’s credit score.
There is hope after bankruptcy. The light at the end of the tunnel does exist. Those worried about the bankruptcy process are faced with valid concerns. This is why it is essential to not only explore the options one has when filing for bankruptcy but gain a perspective on how life after bankruptcy will look like.