It’s not uncommon for unexpected issues or life events to spark financial problems. If a member of your Georgia household experiences a health crisis, loses a job or has a car breakdown, it can take a heavy toll on the family’s finances. Sometimes, relief is necessary to resolve debt and rebuild solvency. Filing for bankruptcy is often the most viable option.
Some people hesitate to file for bankruptcy for various reasons. They might feel embarrassed or as though filing constitutes financial failure. There are also people who worry that bankruptcy will ruin their credit scores or prevent them from getting a loan in the future, neither of which is necessarily true.
Bankruptcy will not become a permanent fixture on your credit report
If you file a bankruptcy petition, whether it’s Chapter 7 or Chapter 13, it will show up on your credit report. However, after a certain amount of time passes, the filing will disappear from the report. Each program works differently to provide debt relief, and the amount of time a bankruptcy stays on your credit report depends on which type of petition you file.
You can often improve your credit score in less than 2 years
It is not true that filing for bankruptcy means you will never be able to improve your credit score. In fact, it might not take as long as you imagine. If you obtain a secured credit card and make consistent, timely payments, you might be able to boost your credit score in approximately 18 months or so.
A secured credit card requires a cash deposit in advance, which insures your purchases. Practicing good credit habits is the best way to improve your credit score after a Chapter 7 or Chapter 13 bankruptcy.
Number of debts and discharge amount have an impact on your credit report
If you do not have a lot of different debts and the amount of discharges you receive through bankruptcy is relatively low, it will have less of an impact on your credit score than a higher discharge amount for many separate debts. Try not to panic if you notice a drop in your credit rating shortly after filing for bankruptcy.
Remember that it’s not a permanent status and that you can soon start to rebuild solvency and boost your credit score. Many people are even able to obtain personal loans after filing for bankruptcy. Seeking experienced guidance ahead of time can help you learn about each program and determine the option that best fits your needs.