Living under the crushing weight of debt is an emotionally (and even physically) draining experience. And the more the debt grows, the harder it gets to escape it. Filing for bankruptcy protection is one way that many people struggling with debt get their financial houses back in order.
Unfortunately, there are countless people out there who avoid utilizing the bankruptcy process because they worry about what it will mean for their future. Many people think that a bankruptcy filing will be a permanent black eye on their credit record that prevents them from ever being able to buy a house or car or open another credit card.
What really happens after bankruptcy?
The truth is that, yes, after you emerge from bankruptcy with a fresh start, your credit score will take a substantial hit. Additionally, the bankruptcy filing will show up on credit reports for several years.
However, if you were drowning in debt before your filing and you were dealing with late payment notices, repossession attempts and garnishments, your credit score was likely already low, indicating to banks that you were a high risk to not pay back any loans.
By discharging your unsecured debts like credit card bills and medical bills and giving you time to catch up on late mortgage payments, you will emerge from bankruptcy in a stronger position to begin rebuilding your credit. It will take hard work and patience, but you can do it.
What you need to do
If you are starting to work at rebuilding your credit, you need a game plan. You will need to:
- Budget properly to make sure you do not get in over your head again
- Pay your bills on time to start improving your credit score and signal to banks and other lenders that you are a low risk
- Put in the work and don’t rely on scammers that promise to quickly restore your credit for a fee
The products available for you
Even with a low credit score after bankruptcy, there are likely credit products that are available to you. While they may not be what borrowers with a higher credit score can access, they do provide an opportunity to maintain cash flow and pay them off to rebuild your score. These include:
- Installment loans that allow you to make a set monthly payment
- Short-term loans from your bank that may have terms favorable to you
- Secured credit cards that allow you to charge the amount of collateral you put down
Many of these products come with their own sets of pros and cons, and you need to be sure that you are making the choice that is right for you and your situation. The first step is deciding if seeking bankruptcy protection is right for you. To learn more, you can call our bankruptcy attorneys at the Quinn Law Firm today at 814-833-2222 to discuss your options.