Swimming in debt can have a negative impact on your life. When you don’t feel like you have any way out because you simply can’t make the payments, you might realize that you need to turn to bankruptcy. This isn’t something that you should be ashamed of. It is a choice that can help you to regain control over your finances.
Some people might be concerned about filing for bankruptcy because they don’t fully understand some of the more basic points about how this can impact their financial future. There are so many myths about bankruptcy’s impacts that it is hard to discern what is fact and what is fiction.
Bankruptcy will affect you for life
The type of bankruptcy you file has a direct impact on how long the filing will affect your life. A Chapter 7 filing will remain on your credit report for 10 years, so this one will affect you for longer than a Chapter 13 bankruptcy. If you file a Chapter 13, you can expect that it will affect you for seven years. This doesn’t mean that you can’t start rebuilding your credit during this time, it simply means that you will have to work hard to get back on track.
Debts in bankruptcy are wiped off your credit report
The debts that you include in the bankruptcy will remain on your credit report for up to 10 years. As time progresses, these accounts will begin to impact your credit score less and less until they don’t matter at all. You can lessen the impact that these debts have on your score by starting to build a positive credit history through options like secured credit cards.
The amount of debt doesn’t matter
The amount of debt included in the bankruptcy has a direct impact on how much your credit score will drop as a result of the filing. Higher balances will usually have a bigger impact on the effect. While this shouldn’t be a factor in whether you file, it is important for you to remember that your case might not affect you in the exact same ways that another person’s affected him or her.
Making the decision to move forward with bankruptcy likely isn’t easy. You need to consider the overall picture about how it can help you and how it might impact your life in the short-term and longer. Getting your case moving forward sooner rather than later can help you to enjoy financial security faster.
