Once upon a time - prior to the collapse of the housing bubble, the rise of student loans and the numerous other factors that have spelled financial ruin for a growing number of American families in recent years - personal bankruptcy was often regarded as a sign of failure that could doom a person's future financial prospects. In today's battered but recovering economy, however, both individuals and institutions are increasingly likely to take a more sympathetic view of personal bankruptcy and see it for what it is: the sign of someone who recognizes when they are in over their head and takes steps to address the problem.
If you are considering bankruptcy as a potential solution to your debt problems, it may provide some comfort to know you are not alone. According to a recent NBC report, personal bankruptcy filings have risen 30 percent nationwide over the past year. Ohio had the nation's 13th highest per capita bankruptcy rate in 2014, with 360 people per 100,000 filed for bankruptcy that year. Meanwhile, Florida ranked 16th in the nation with 347 bankruptcy filings per 100,000 residents.
Improving your credit after bankruptcy
There is no way around the fact that bankruptcy is most likely going to take a big bite out of your credit score - at first. However, it is important to keep this in perspective; if you are constantly behind on your debts and missing payments, chances are this is already taking a huge toll on your credit score, and it is not likely to stop until you take care of the problem. Depending on your circumstances, bankruptcy may help you eliminate those debts and make a clean start. Once you do that, you can begin the process of restoring your credit from the ground up.
As surprising as it may sound, one of the best ways to rebuild your credit score after going through bankruptcy is by using credit. However, in order to make sure your debts do not get out of hand again, you must make sure to do so carefully and methodically. You can start out small with things like your phone, rent and utility bills, making sure to pay them all on time or ahead of time every month. This helps establish a pattern of responsible money management and get you in the habit of paying your bills on time.
Once you feel ready, you can start taking on small amounts of debt and paying it off consistently. A good way to do this is by choosing a single small charge, such as your phone bill, to pay with your credit card each month. If you do not use the card for anything else, and you pay off your balance in full every month, it can help you improve your credit score while also minimizing the risk that the debt will pile up again.
By working diligently in this manner after bankruptcy, many people are surprised to see their credit scores rebound more quickly than they had expected - and certainly more quickly than could be accomplished by simply ignoring the problem and falling deeper and deeper into debt. In fact, some people are even able to qualify for a home mortgage or other large loan within just a few years after bankruptcy.
To find out more about the bankruptcy options that may be available to you if you are struggling with debt, contact the Law Office of Paul L. Urich, P.A., for a personal consultation.