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Debt relief: Credit can be rebuilt after bankruptcy

| Dec 31, 2018 | Debt Relief |

Many Louisiana residents worry about the state of their finances. It is also not unusual for people to worry about how certain debt relief options, like bankruptcy, may negatively affect their credit. However, credit can be rebuilt, and bankruptcy often has more benefits than negative repercussions.

The lowering of a credit score is typically the most common worry people have when it comes to bankruptcy. It may be useful to understand that if a person already has multiple negative marks on a credit record — which is common for people struggling financially — it is likely that bankruptcy will not lower the score much more. Another worry individuals have is that they will not be able to qualify for loans after bankruptcy, but that is not necessarily the case. Certainly, denials could take place, but some lenders may still approve loans while requiring a larger up-front deposit or applying higher interest rates.

Additionally, individuals who file for bankruptcy can rebuild their credit afterward. Opening a secured credit card account can help with this endeavor and so can paying bills on time. It is also wise to put money into savings. While having savings accounts will not increase credit scores, it can allow individuals to have money to fall back on that would prevent them from having to rely on credit cards in the event of an emergency.

Bankruptcy can certainly seem intimidating, and the worry about its impacts on credit scores is understandable. However, Louisiana residents should not discount this option until they have all the information and truly understand how it could affect their financial affairs. Often, individuals learn that this debt relief option can help them more than hurt them.

Facing Overwhelming Debt?