The Fresh Start of a Bankruptcy May Restore Credit Faster

Written by Administrator

People think about filing for bankruptcy when their alternatives have gotten worse. Knowing when you are there can be difficult though. One mistake that makes some think twice about filing bankruptcy is the possible impacts on credit. A study by the Federal Reserve Bank that compares credit of those who have filed bankruptcy with people with many defaults showed what bankruptcy attorneys already knew.

The research found that credit scores of those who have filed are a lot better than those dealing with defaults.

Bankruptcy is not an easy decision to make. It is a good idea to think two years ahead and compare where they will be without bankruptcy to see if it is an okay option. If the only thing that has changed is that you are even more in debt, it is a good idea to consider a bankruptcy. 

How can you know if you are at an area where bankruptcy is a good idea? 

If you're thinking about liquidating a 401k/pension.

If you're trying to juggle payments because you can't afford all bills.

If you're putting essentials on your card.

If you're attempting a loan modification and can afford only credit card payments.

Bankruptcy stays on your credit score for ten years, but will not stop you from having credit for that long.