No one should have to live with overwhelming debt. Yet, that’s what millions of Americans do on a daily basis. Oftentimes, though, these individuals can secure financial relief if only they’d explore personal bankruptcy as an option. The reason many of them hesitate is fear of what bankruptcy will mean for their future. Although bankruptcy has a lot of negative associations, it can provide very real financial relief while protecting your financial viability in the long-term. While you might recognize that you can keep certain assets through various bankruptcy exemptions, you might still find yourself worried about the hit your credit score will take and the implications of that.
It’s true that your credit score will decrease when you pursue bankruptcy, but it doesn’t have to stay that way forever. In fact, there are a number of steps you can take to rebuild your credit and better position yourself for success post-bankruptcy. Here’s what you can do to rebuild your credit:
- Check your credit score to ensure that debt forgiven through bankruptcy doesn’t show up as delinquent and outstanding.
- Keep paying down loans that weren’t discharged during bankruptcy, like credit cards or debts that were reaffirmed.
- Obtain new credit to demonstrate that you have the ability to pay off balances
- Consider utilizing a co-signer if needed to obtain a new affordable loan.
- Make all payments on time.
- Don’t let your balances get too high.
- Be selective in the credit you seek out and do so only sparingly.
- Be patient.
This last tip is maybe the most important. It’s going to take a little bit of time for your credit to get to the point where you want it, but it is possible. After a while, you can even have your bankruptcy taken off of your credit report.
So, all of that is to say that you shouldn’t let fear of a lower credit score dictate your decision of whether to pursue bankruptcy. After all, struggling to pay off debts can also reduce your credit score. Why not seek out the debt relief you need so that you can secure a fresh financial start?