One of the biggest concerns for people in Arizona who are facing financial difficulties and considering the option of filing for bankruptcy is how it will affect their credit. For many, this is a problem that prevents them from trying to clear their debts by filing for personal bankruptcy. Knowing strategies to improve credit even after a bankruptcy filing can assuage the concerns and make it a more viable option.
In 2013 alone, more that 1.1 million people and businesses filed for various forms of bankruptcy. The idea behind bankruptcy is to help those who are no longer able to keep up with credit card debt and other bills. In essence, it is a fresh financial start. Concerns for those filing are how it will harm their credit score and how to rebuild credit. Filing for bankruptcy will obviously influence credit scores. The interest rates on loans, and whether or not a loan is available to begin with, is often contingent on credit scores. On a scale of 300 to 850, a credit score can be dropped into the 500s or lower after a bankruptcy. It is a warning to lenders that the borrower might not be reliable.
Even after filing, though, there is the opportunity to rebuild credit. To start with, you should know your credit score by obtaining a credit report and checking for mistakes. It is possible to get credit after a bankruptcy filing, whether it is a Chapter 13 or Chapter 7 bankruptcy. Having a bank account will show lenders that you have some stability. Paying your post-bankruptcy bills when they are due, and paying them in full, can be a signal to lenders that the risk of lending to you is not so severe as to prevent them from providing you credit. A secured credit card with reasonable interest rates and paying its balance immediately every month is a sound way to rebuild credit.
Since it is so difficult to function in today's society without credit, those who are reluctant to file for bankruptcy need to understand that doing so is not a death sentence to their financial life.. Acquiring the assistance of a legal professional can help ensure you receive the answers you need to make the process less intimidating. This will allow you to make an informed decision about bankruptcy and its possible ramifications.
Source: Huffington Post, "How To Rebuild Your Credit After Bankruptcy -- Fast," Curtis Arnold, Oct. 15, 2014