Filing for bankruptcy is a special decision. Bankruptcy may seem like your whole world is crashing down on top of you. But bankruptcy isn’t the entire weight of the world falling on you. Instead, it’s the weight of your debt burden being lifted from you and giving you a fresh start. That doesn’t mean bankruptcy isn’t without its drawbacks. How does bankruptcy affect credit ratings?
Is Bankruptcy the Right Decision for You?
While this may seem like a negative, it is crucial to remember that they also have the crushing burden of lifted. After all, if the individual was struggling with credit card debt, losing access to these burdens will allow them to learn to cope financially without them.
One of the best ways to consider bankruptcy is facing reality, over living in denial. Try contemplating if you could repay your entire debt in two years, over 24 installments. If this sounds like an impossibility, would you rather lug around an unserviceable debt and take a continual hit on your credit score?
Or would you rather accept that your finances need restricting, and save yourself the torture and burden of living in a nightmare of debt and not even being able to even pay off the monthly interest?
Credit Score
As noted above, filing for bankruptcy, both chapter 7 and 13, will hinder your credit score. But it does not mean that filing for bankruptcy is not in your best interest. Nor does it mean that filing for bankruptcy will necessarily destroy your credit – it may be the fastest route back to improving your credit score.
If your credit score is already poor, the expected hit to a credit score will be greatly diminished. If you were already behind on payments for things like credit cards, or have items in a collection, bankruptcy is a great long-term solution to rebuild poor credit. This is because bankruptcy often eliminates certain types of debts, including:
- Credit card debt
- Payday loans
- Utility bills
- Delinquency judgments on foreclosure and repossessions
- Landlord judgments – including damages and back rent
Having these types of debt unburdened from you may help you start over again financially and help you learn to make better financial judgments, leading to an improved credit rating over time.
Contact a Bankruptcy Attorney Today
If you find yourself sinking in a sea of debt, but want to protect your hard-earned assets, take steps to improve your credit score. Moreover, you need to contact an experienced bankruptcy attorney right away. Bankruptcy isn’t the end – it’s a new beginning! Call The Law Offices of Patrick L. Cordero for a free consultation today at (305) 445-4855.