When people think about bankruptcy, one of the first things they worry about is the effect it will have on their credit report. That is not an unreasonable concern since bankruptcy can stay on your report for up to ten years.
Bankruptcy is not the only thing that can harm your credit score, foreclosures, court judgments, liens, repossessions, late and missed payments will all negatively reflect on your credit report and can stay on your report for up to seven years.
If you are at the point of considering bankruptcy, your credit report might be the least of your worries. Losing your home or your vehicle should worry you more than your credit score and being able to borrow more money in the future.
When you file bankruptcy, a process called the automatic stay comes into effect, stopping all collection attempts against you. That includes foreclosures, repossessions, and utility shut-offs.
When you file bankruptcy, you are given the time to assess your financial situation and figure out what course of action is best suited to your needs.
Your low score will probably keep you from being able to borrow money to catch up on your bills, but seriously, is that your best choice, another bill? Eliminating your debt in bankruptcy and removing your legal responsibility to pay back some debt frees up your income to be able to pay your bills more comfortably.
Your credit score will take a hit from filing bankruptcy, that’s true, but is it better to keep your home and assets or lose it all in an attempt to save your credit? Your credit score should cease to matter when you are trying to get your finances healthy again.
Most of the time, after filing bankruptcy, you will not have to wait the ten years before credit offers start arriving in your mailbox. Be wary of these offers early on as they usually have high-interest rates. If you prove your creditworthiness by paying your bills on time and avoiding the high-interest loans, you will become a good candidate for the lenders before the bankruptcy drops off of your report.
The bankruptcy laws are there to give you a financial break. Contact a Houston bankruptcy attorney to find out what you can do to get out of overwhelming debt.