If you are considering bankruptcy, you might be worried that it’ll destroy your credit, and you’ll never have an opportunity in the future to buy a home or car. However, if you are in a position to consider bankruptcy, your credit may already be suffering. If this is the case, you should know that every single month, your credit suffers just a little bit more. As your credit score decreases, the interest on your debt is piling up, and your overall debt is getting higher. The absolute worst thing you can do for your credit isn’t filing bankruptcy, but rather, doing nothing at all. There are ways, believe it or not, that bankruptcy can actually help your credit.
End the Expense of Stress
Stress can do an unbelievable amount of damage to your body. Right now, you could be increasing your debt through medical bills that may not exist if you weren’t already financially overwhelmed. This means you may be missing work as well, so your debt is affecting your ability to work and is essentially reducing your income. The less income you have, the more likely you are to not be able to meet your financial obligations and when it comes to providing for your family, this isn’t something you want to risk. Decreasing income and increasing debt through bills and other expenses, has a tremendous impact on your credit.
Get a Fresh Start
Bankruptcy allows you to get a fresh start. Yes, it will reflect on your credit report and possibly result in a low credit rating for a couple of years, but so would your growing debt. At least, with bankruptcy, there is an end in sight. On the other hand, outstanding debt and bad credit reports could feel endless and grim. Believe it or not, many creditors would rather see a bankruptcy on your credit report than no action at all. The bankruptcy shows them that you have realized your limits and taken steps to do something about it. The bankruptcy also indicates a clean and new debt-free beginning.
Enjoy More Credit Opportunities
Filing bankruptcy allows you more access to credit. You will pay a higher interest rate than you were paying before your debt issues, but this simply means you need to use your credit wisely. Creditors are often willing to extend credit after bankruptcy simply because they know you can only file so often. Plus, when you manage your new accounts responsibly, you are building a positive payment history which leads to other offers with lower interest rates and better terms.
Bankruptcy gives you a chance to clear the slate. You may even be able to start a savings account and put some money back while you try to rebuild your credit. Sometimes struggling through hard times and trying to make payments using money you don’t have can be more harmful to your credit.
Has your credit score increased since filing bankruptcy? How has bankruptcy affected your credit? Share with us in the comments.