Will declaring bankruptcy affect my credit score? Probably. Should the damage to your credit prevent you from declaring bankruptcy? Absolutely not. We come across folks who are drowning in debt who believe their credit score is more significant than their financial situation. Their logic appears to be that once credit has been harmed, it can never be restored.
That isn’t the case. Keep reading to learn why “saving” your credit is not worth holding on to debt and why filing for bankruptcy could be the answer you are looking for. Then contact Law Offices of Terrence Fantauzzi at (909) 552-1238 for a consultation.
Credit damage is neither permanent nor long-lasting
Your “credit,” or rather, your ability to obtain fresh credit, is virtually a living, breathing entity. It can take a hit and bounce back. Consider it this way: A credit hit is similar to a cut. Whether you opt for debt settlement, debt management, or bankruptcy, your credit will suffer in the short term.
Consider credit damage to be a wound. When a wound bleeds, the rest of your body is exposed to infection. It aches. Consider bankruptcy to be antiseptic. It hurts to apply antiseptic to the lesion to kill infection and encourage healing. However, the pain subsides. The wound heals and scabs over time. The majority of the time, it isn’t painful.
There is a scar once it has healed. Even the scar disappears with time.
Debt is a chronic illness
It’s like having a disease that you can’t get rid of when your obligations become unmanageable. Consistent symptoms, sometimes getting worse over time, sometimes just being there. Debt drains your energy, absorbs your thoughts, and restricts your options.
If you’ve considered bankruptcy because of your bills, your credit worthiness has most likely already been harmed. Would any creditor be willing to lend you extra money at a reasonable interest rate? If not, your credit may not be serving you well right now.
What matters is your balance sheet
A credit report is a snapshot of your financial history. As time passes, the oldest history is removed from the report and replaced with a picture of the current financial situation. When you declare bankruptcy to discharge existing obligations, your balance sheet (assets minus liabilities) immediately improves.
For time, your bankruptcy filing will be visible on your credit record. However, as you go further away from filing, its importance to lenders diminishes. However, with your past loans gone, you no longer appear to be someone who is already in as much debt as they can bear, if not more.
Take measures to improve your financial situation, and your credit will improve as well. The first step is to contact a bankruptcy attorney to determine if you should file Chapter 7 or Chapter 13 bankruptcy. You can do so by contacting Law Offices of Terrence Fantauzzi at (909) 552-1238.