Declaring bankruptcy is a serious matter that needs to be considered carefully. Long before declaring bankruptcy, you should consider meeting with financial professionals who can help you ensure it’s the right decision to make. Filing bankruptcy only takes a few minutes, but it will have longstanding effects even after the relief it provides is over. One prime example is your credit score.
Without a doubt, the worst thing you can have on your credit score is having had declared bankruptcy. For most people, having accounts of collections listed is considered the worst case scenario. Bankruptcy is a step far past that. It means you were in collections and weren’t able to pay yourself out. Instead, the courts had to intervene.
This doesn’t mean filing bankruptcy isn’t sometimes the right move. Sometimes it’s the only move you have to make. The whole reason bankruptcy exists is because, sometimes, people need some help in order to get back on their feet.
Sometimes, too, it’s important to consider that your credit ranking is probably going to suffer either way if you’re in a place where declaring bankruptcy is something you’re considering. Even if you’re able to work your way out of debt, it could be years of fighting off bill collectors and watching your credit score take a beating.
In such a situation, declaring bankruptcy, getting some breathing room, and working from a fresh start may be the right thing to do. It will take a lot of effort, but you can always work toward better credit once you’ve declared bankruptcy.
You’ll still want to speak to a bankruptcy attorney or some other kind of financial professional before filing though. Although filing bankruptcy can give you relief, it can also be the last step before something worse, like foreclosure. Then it hasn’t done much for you and you can expect your credit score to really hit rock bottom.