Far too many families in New York struggle with overwhelming debt. This burden can leave you scrambling to figure out how to pay bills, prevent foreclosure and repossession, and keep food on the table. It’s stressful, overwhelming and frightening. If you’re in that position now, then you might not know where to turn for help.
The good news is that personal bankruptcy may be able to provide you with the very real debt relief that you need. The process may be able to help you shed your debt while allowing you to keep a significant amount of assets, thereby giving you the fresh financial start that you need to get back on your feet.
What about your credit score?
Although bankruptcy can provide you with real relief, many people are worried about the ramifications of following the process. One of their concerns is that bankruptcy will ruin their credit forever, thereby making it hard for them to secure loans for a house, a car, or other large purchases.
While it’s true that your credit score will take a hit by pursuing bankruptcy, the impact is temporary, only lasting 10 years for Chapter 7 filings. As daunting as that may seem, there are steps that you can take to rebuild your credit score after bankruptcy, thus minimizing its impact on your credit score. Here are some of them:
- Stay current on existing debt obligations: Whether you carry over some debt from your bankruptcy or you take on new debt post-bankruptcy, make sure that you stay current on all of your bills. After all, your payment history makes up a significant portion of your credit score. So, creating a track record of on-time payments is key to rebuilding your credit score. Setting up autopay may be a helpful tool to keep you on track.
- Consider taking out limited lines of new credit: Despite a recent bankruptcy, there are probably going to be lines of credit available to you. This gives you the opportunity to prove that you can responsibly manage your debt and make payments on time. Your options here may include a credit builder loan or a secured credit card, both of which require an up-front deposit in order to serve as collateral on the line of credit.
- Utilize a co-signer: If you still struggle to secure credit, then you might want to consider having a co-signer on a loan. This individual is equally responsible for the debt, which gives the creditor more security. You’ll just want to make sure that you stay current on these loans, or else your co-signer will be on the hook, which could significantly damage your relationship with them.
- Try to keep stable employment: To secure credit, you’re going to have to demonstrate that you have stable employment and a stable income. Therefore, you should avoid hopping from job to job, if at all possible, as that may give creditors the impression that you lack the stability that they hope to see prior to loaning out money.
Talk to an attorney to address your concerns
We know that credit scores are just one concern of those who are considering bankruptcy. But bankruptcy is still an effective way to eliminate debt and get you back on the path to financial stability. Therefore, if you’re tired of dealing with the stressors associated with overwhelming debt, then now may be the time for you to discuss your circumstances and your concerns with an attorney who is experienced in navigating the personal bankruptcy process.