One of the main reasons Kentucky residents facing overwhelming debt are hesitant to file for Chapter 7 bankruptcy is because they are afraid they will not be able to rebuild their credit again. Often, it takes years of hard work and money management to build credit and people are afraid filing for bankruptcy will ruin it. What many do not realize is that it is late payments and low payments is hurting their credit score just as much, if not more. Filing for personal bankruptcy is one way that they can gain control of their financial life and eventually, re-establish control over their credit as well, since they can stop trying to repay their impossible debt and only on focusing on their debt.
How long does a bankruptcy stay on the credit report?
Bankruptcy usually stays on the credit report for up to 10 years. However, its impact starts fading as soon as a year on. In fact, it is possible that one year on, a debtor’s credit score is better than it was before filing for bankruptcy. Additionally, it is possible to begin rebuilding credit right away after filing for bankruptcy.
How to understand my financial situation
Checking credit reports regularly is important to understand one’s financial situation. Sometimes, there are errors on one’s report that can be fixed. Other times, there is negative information on the report that is correct, such as debts that went into collection. In those cases, debtors just have to wait for the information to get off the report. Similarly, credit scores should be tracked regularly as well.
How can I rebuild my credit?
In order to begin rebuilding credit, it is important to get a credit product as well, but one that fits one’s situation. A secured credit card is one way to go—it is backed by a deposit paid by the debtor and the limit is what has already been paid. While it has a high interest rate, it should be used in the short term to build credit again, until one is able to get an unsecured one. Other than this, it is possible to get a secured loan or have someone co-sign a loan application.
There are options available to help people get back on their feet after filing for bankruptcy. This should not be an impediment to someone trying to get control over their finances and an experienced attorney can discuss options that best suit someone’s situation.