Declaring bankruptcy can be a gut-wrenching decision. It carries such a negative connotation and it is often seen as the last resort. However, how much more destructive is it really than trying to hold on and catch up to pay off your current debt?
Credit problems can cause an excess of stress. When you have problems paying your debts each and every month and the creditors are calling on the phone everyday your life can be awful. So long as you have any delinquencies the stress remains, and these problems can remain on your credit report for 7 to 10 years.
After a bankruptcy you can start to rebuild better credit. You can also find relief from the credit problems you are having because the slate will be erased. You start building good credit again and the easier it gets. The bankruptcy itself will stay on your credit for 7 to 10 years but the good credit you start to build afterwards really helps improve your financial future. You can start living so that you can start prospering again.
So whether you decide to declare bankruptcy or you continue to try to play catch-up you will have credit difficulties that haunt you. The difference is that with a bankruptcy you can begin again with a clean slate and otherwise you will have delinquency problems following you around for years. Some problems can’t really be fixed and the only answer is to just start over.
The first thing to do is read your credit report carefully. Make sure everything is in order including your address. Often, your debts and credit history is tied with your address. Take note of the accounts that are “included in bankruptcy” and place them in dispute. Creditors have very little resources to verify the veracity of these accounts. Dispute anything that is not accurate so that you’d remove bankruptcy from your credit report.
You can start to repair your credit right away after filing bankruptcy. You should go to your local bank or credit union and see if they will give you a small loan to pay off. You will probably be required to pay a higher interest rate but make sure that you borrow less than $1000 and pay if off as soon as possible after 3 to 6 months. The higher interest rate should not affect you too much because of the small amount that you borrowed and the fact that you are going to pay it off as soon as you get a few timely payments reported on your credit report.
Secured credit cards can also be a good way to start to rebuild. Deposit some cash into an account with a company that offers secured credit cards and you have the rebuilding of your credit process started. Sometimes you can get these cards for as low as $350 to $500. Just make sure that you keep your payments on time.
Your credit report will start showing improvement immediately as soon as you begin to do these things. Your report will still show the bankruptcy but you will be working towards better things. If you just try to struggle through your excessive credit problems it may be noble and you may think that you are doing the right thing but in the long run you may be just prolonging the pain. You can rebuild after a bankruptcy but you can’t ever repair your credit if you are continually playing catch-up.
Bankruptcy is a serious consideration and it can be an excruciating decision to make. However, you will be able to start over and rebuild with a clean slate and sometimes that can be the best solution.