There are numerous benefits associated with the process of filing for bankruptcy. For example, the automatic stay can halt creditor action, wage garnishment and foreclosure. And the discharge of a filer’s debts can allow them a chance at achieving a strong financial future that they might have otherwise been denied.
Yet, there are some drawbacks to the bankruptcy process that filers will experience as they move forward. Most notably, filing for bankruptcy causes an individual’s credit score to drop. Although it is absolutely possible to rebuild a filer’s score higher than ever before, this process requires both time and effort.
Taking thoughtful approaches
The challenging news is that a filer’s credit history – and credit score derived from an assessment of that history – will remain negatively affected by bankruptcy for a few years. The great news is that the impact of that bankruptcy filing will become less and less dominant over time.
Creditors are primarily concerned with how an applicant for financing has been handling their finances in the relatively recent past. As a result, anyone who has filed for bankruptcy and who wants to rebuild their credit needs to engage in thoughtful, responsible approaches to credit, debt and spending in order to reach that goal.
Specifically, they’ll need to pay their debts on time, every time. They will also want to keep their credit ratio low. Meaning, they won’t want to max out the credit that is available to them once they start opening new lines of credit. Finally, they may benefit from seeking guidance from a legal professional who understands their circumstances and can provide them with personalized feedback designed to improve their score quickly and safely.