August 29, 2013 /24-7PressRelease/
-- Many people who are overwhelmed with debt are afraid of taking steps to change their situations, such as filing bankruptcy, because they believe that they will irreparably damage their credit scores. What many people do not realize, however filing bankruptcy can actually improve the credit scores of most who file because it cleans up their credit. Many see an improvement of 50, 100 or more points within a year of the bankruptcy.
Financial problems already weigh down credit scores
Those who are considering bankruptcy
usually have been struggling to pay off their debts for a long time. They often have had to amass more debts along the way to meet their basic needs, as well. Their credit scores are often already low, due to having delinquent accounts on their credit reports and histories of missed or late payments. They lack funds to pay off their current debts, so they have no plausible way of repairing the damage to their credit scores.
People who are in financial distress but do not choose to file bankruptcy
continue to struggle and fall further behind in their payments. Each missed or late payment drags a person's credit score down further, and they rarely can get ahead. They also will continue to have high debt-to-income ratios, which is another way that credit scores fall. Bankruptcy offers people an opportunity to reorganize their finances. They can eliminate many debts at the end of the process with the bankruptcy debt discharge, which means the debts will also come off of a person's credit report.
While a bankruptcy stays on a person's credit report for up to seven years, the impact of the bankruptcy on a person's credit score decreases as time passes. People need to remember that bankruptcy does fall off their credit reports, so it's not forever.
Most people can reestablish credit within 1-2 years after the bankruptcy. After two or three years of responsible payment history on obligations remaining after discharging debts in bankruptcy, many people's credit scores move back into the "good" range.
Talk to an attorney
Those who are barely making ends meet and falling behind in paying their debts often feel like they have no options to improve their situations. However, filing bankruptcy may be a way to regain their financial footing. If you have been considering bankruptcy, speak with an experienced debt relief attorney who can discuss your options with you and help you decide whether bankruptcy is the best fit for your circumstances.
Article provided by Stamps & Stamps, Attorneys at Law
Visit us at www.stampsbankruptcylaw.com