Debt struggles are something that many people are affected by, and finding the right solution is not always easy. As a bankruptcy lawyer can explain, when done right, filing for bankruptcy can help you achieve financial freedom so that you can be free from a life with debt. One of the biggest concerns that people have about bankruptcy however is how it affects their credit. However, there are many misconceptions that have persisted and distorted common understanding of how your credit is impacted by filing for bankruptcy.
Bankruptcy Ruins Your Credit Score
People are often hesitant to file for bankruptcy because of how it affects their credit score. Filing for bankruptcy does cause your credit score to drop significantly, however your credit score will not remain that way forever. For many people who have filed for bankruptcy, their credit score begins to gradually go up after several years. Some people even see that their score starts to improve after just a few months of careful budgeting and on-time credit payments. Implementing the right spending and credit habits can also help you build up your credit score faster.
You Are Not Able to Get a Loan
When you file for bankruptcy, it may affect what types of loans you are able to get as well as the interest rates for them. However, you will still be able to get a loan even if you file for bankruptcy. Certain loans, such as credit builder loans, are designed to allow you to gradually build up your credit again and become more financially stable. These special types of loans give the lender protection in the event that you are unable to fulfill your payment obligations.
Bankruptcy Stays On Your Record
One of the biggest myths about bankruptcy is that it will stay on your record forever. That is actually not the case. Bankruptcy can only stay on your financial record for up to ten years. While this may seem like a long time, it is still temporary. In the meantime, you will be able to build your credit again and achieve a higher score than your previous one.
You may have a lot of questions about bankruptcy and how it will impact your finances. You can ask all of your questions to an experienced bankruptcy lawyer who will be committed to helping you make the best decisions so that you can achieve relief from staggering debt. Don’t wait to learn about your options and see whether bankruptcy is right for you. Contact a skilled bankruptcy lawyer today for more information.