Personal - Bankruptcy & Your Credit
Bankruptcy and credit are directly linked to one another. Credit is
how many people run into trouble with their finances, and ironically how
they remedy their financial problems at the same time. Credit
availability and the encompassing pressure to maintain a good credit
ranking will often allow lenders to form prejudices. Many times this can
make be the difference between receiving, or being denied, a large loan.
When someone goes bankrupt several things take place. By filing for
bankruptcy you acknowledge that you are not able to pay your debts and
must be relieved from having to pay off your unsecured debts.
Unfortunately, this relief from debt comes at a price. Declaring you are
bankrupt makes you at risk to creditors. You are less likely to receive
extended credit when you need it, and on top of that you will be charged
extremely high interest rates.
Fortunately one of the best things about bankruptcy is its ability to
restore your credit rating. By opening a high interest rate credit card
and making regular payments for the first few years after bankruptcy,
you will demonstrate that you are willing and able to make payments in a
timely fashion. Eventually your rating will rise and you can have credit
available next time you need it. This process can be somewhat long, but
for those who are willing to work towards the ultimate goal of having
good credit, it can be well worth it.
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