Pennsylvania residents who are considering bankruptcy to clear overwhelming debt are often stopped in their tracks by fear about what it will do to their credit score. This should not be dismissed. However, there are significant benefits to bankruptcy even with a lower credit score after the fact.
Know the facts about bankruptcy and credit scores
Knowing how the credit score is impacted can give a clearer picture about the process and how to rebuild credit. The bankruptcy will appear on a credit report for as long as 10 years after the case. Those who have severe delinquencies will have a lower number.
Importantly, people struggling financially are likely already having problems with their credit score due to late or missed payments, so it might not reduce substantially after the bankruptcy. People can restart their credit lives whether they file for a Chapter 7 liquidation or a Chapter 13 repayment plan.
Some of the options to boost credit after bankruptcy are:
- Getting a secured credit card
- Considering well-known credit repair companies
- Making payments on time and for more than the minimum amount
- Remembering not to make the same mistakes that led to financial trouble
Overwhelming debt can come about for myriad reasons from unexpected medical emergencies to overextending on credit cards to job loss. Filing for bankruptcy is a viable solution even with the potentially poor credit score in the immediate aftermath.
The overall good of bankruptcy could outweigh the perceived negatives
When people hesitate about filing for bankruptcy because of the consequences with their credit score, they are not seeing the overall picture. It is true that bankruptcy harms credit, but it also lets people get into a better financial situation, pay their bills on time and save money.
This is the foundation to establishing credit. To retain a home, keep certain properties, eliminate credit card debt and restart their financial lives with a clean slate, it is imperative to think about the positives regarding a successful bankruptcy filing and to have assistance with moving forward.