Bankruptcy and your credit score
Bankruptcy is touted as a fresh financial start, but those who have done some research likely know it will have a negative impact on one’s credit score. Although this is true, there are many reasons bankruptcy may still be the best option. Three common examples to take into consideration before ruling out bankruptcy include:
- Unmanageable debt. Failing to pay off debt will continue to chip away at one’s credit score. Depending on the type of debt, a successful bankruptcy petition can resolve this problem. Bankruptcy can lead to the discharge of debt, meaning the applicant is no longer liable for the debt. This can essentially wipe the debt off your record.
- Alternative methods are not an option. In some cases, consumer credit counseling services can offer an alternative to bankruptcy. Others may consider paying off debts with installments. If alternatives like those noted above are not an option, bankruptcy may be the best bet.
- Credit score is fluid. The credit score for each individual is always changing. It is not a static number. After the bankruptcy is complete, active steps are available that can help rebuild one’s credit score. Paying bills on time and using a credit card properly are two ways to take control of your financial future and start building that score.
Attempting to regain control of your finances is a frustrating process. A skilled lawyer with experience in alternatives to bankruptcy and the various forms of bankruptcy that are available can help guide you through this process and alleviate some of that frustration.