People who are struggling with overwhelming debt often benefit from filing for bankruptcy. However, many people who could benefit from the fresh start that bankruptcy affords hesitate to take advantage of this option. Why? They are understandably concerned that filing for bankruptcy will destroy their credit.
The challenging news is that filing for bankruptcy does get noted on a filer’s credit report and will negatively impact their credit score on a temporary basis. The great news is that filing for bankruptcy often places filers in a far better position to rebuild their credit than remaining mired in debt.
Temporary downsides, long-term benefits
According to federal data, somewhere between 400,000 and 600,000 bankruptcy cases are filed in American courts each and every year. This means that if you’re thinking about filing for bankruptcy, you’re certainly not alone. Whether you’ve experienced a significant, temporary hardship or your debt is mounting with no end in sight, filing for bankruptcy could potentially help you to get back on track.
If you choose to file for bankruptcy, you’ll need to be prepared to weather a temporary hit to your credit score. However, even though your bankruptcy filing will remain on your credit report for between 7-10 years, your credit score won’t be profoundly impacted by this turn of events for that long.
If you exercise responsible financial habits once you’ve achieved a fresh start through bankruptcy, your credit score will begin to rebound. You’ll likely find that you’re able to repair your credit score more quickly once you’re not overwhelmed by debt than you would if your debts remained outstanding.
Before committing to a decision about filing for bankruptcy, learn all that you can about the process, its benefits and its potential drawbacks. Doing so will help to ensure that you can make truly informed decisions about all of your debt relief and debt management options.