While no one sets out to file for bankruptcy, the simple matter is that sometimes you are faced with situations that make it difficult or impossible for you to pay your bills. Faced with insurmountable debt and the inability to make payments to your creditors, there is a very real chance that your credit report is already affected. Late payments and having your accounts go to collections lower your credit score and can stay on your record for up to 7 years. The longer you go without making payments, the lower your credit score will be.
Filing for bankruptcy should not be done lightly. It requires much thought as it is a process. At Khan Law, we understand the journey to bankruptcy is one that is difficult. It can affect your future credit, your reputation and your self esteem. Yes, it may be tough in the beginning as your credit will take a hit but in the long run you will feel relief from the burden of debt and creditors knocking down your door. Because I understand this is a big decision, I have broken down some basics for you below:
Filing Bankruptcy Could be a Better Alternative
You’ve most likely heard the devastating effects filing bankruptcy has on your credit. While it is true that your credit report will decrease an average of 160-200 points depending on which bankruptcy you file, it is also true that filing bankruptcy can be a better solution for your credit in the long run.
When you file for bankruptcy, your credit report will display the bankruptcy and the debts associated with the bankruptcy differently. Since the number of outstanding debts is reduced, your credit score can increase over time.
Time is on Your Side
While having a bankruptcy on your record will affect your credit score and inhibit your chances for receiving good rates on loans and credit cards, there is good news. Over time, the items on your credit report associated with the bankruptcy will have less of an effect on your credit score. If you continue to manage the debt you have and continue to make timely payments, your credit score will improve over time and you will be eligible for credit offers.
Khan Law Can Help
If you are thinking of filing for bankruptcy or have questions about how bankruptcy can affect you, your credit score, and your future chances at credit, please contact us for a confidential and complimentary consultation. One phone call can change your life and put you back on track for leading a life free from debt.