The decision to file for bankruptcy is a major one that requires careful consideration. The process can have an impact on your personal life, finances and business interests.
There is a common misconception that bankruptcy is only relevant to those who have been careless with money, but this is not the case. A significant number of people across the country find themselves in financial trouble through no fault of their own.
One aspect that makes people reluctant to consider bankruptcy as a feasible option is the damage it can do to credit. While it is true that bankruptcy will affect your credit rating, this does not mean that you cannot rebuild your credit rating as you move on with your life. In fact, bankruptcy can offer a clean financial slate for you to work from. If your credit score is already poor, bankruptcy will probably improve your score.
Refrain from bad habits of the past
Although people may not be to blame for their financial hardship, certain ill-advised practices can make the situation worse. For example, credit cards may have been relied upon to clear financial obligations, and then you could not keep up with the credit card payments. As you move forward with your life, the last thing you want to do is swear you won’t use credit cards again. After bankruptcy discharge you definitely should get a few credit cards. Use them for small purchases such as gas or groceries and pay them off every month. Carrying a balance may hurt your credit but paying off the card every month will help a lot. You can improve your credit score quickly with responsible credit use.
At times, people can bring on financial hardship simply by being disorganized. If bills are not being paid simply through carelessness, rather than an inability to pay, this can still impact your credit score. Being organized from the very beginning of your post-bankruptcy life stands you in good stead. Start small by paying utility bills, phone bills and other essentials on time. In a matter of months, you may start to notice significant improvements in your credit rating.
Bankruptcy can be viewed as a new beginning rather than an ending. If you are going through the process, having a firm grasp of your legal rights could ease the transition.