Because your debt situation has become so overwhelming, you may have found yourself considering bankruptcy. Even thinking about this option may have you feeling uneasy, but that feeling may come from misconceptions you could believe about this debt relief method. Chapter 7 bankruptcy can actually prove quite beneficial for individuals who qualify for and complete the process.
Of course, you may worry that your credit score will suffer irreparable damage because of a bankruptcy filing. While it is true that bankruptcy will lower your credit score, the fact of the matter remains that you likely do not have great credit anyway due to your accrued debts. Additionally, bankruptcy does not have to permanently lower your credit score, as multiple options exist for improving your score after completing bankruptcy.
Create a budget
First, in order to work toward bettering your credit, you may first want to better your financial literacy and the way you handle your money. Though your debt may have come about due to a medical emergency or other unforeseen event, the possibility also exists that you may have accumulated credit card debt or other liabilities due to unnecessary spending.
One of the best ways to cut out such spending involves creating a budget. By having a budget, you may feel more organized and in control of the ebbs and flows of your finances. It may also help you notice when too much spending may occur and help you determine how to get back on track.
While creating a budget itself will not improve your credit score, it could help you stay on top of any secured loans or secured credit card accounts you may open. These secured lines of credit are often available to individuals looking to rebuild their credit but who may not have the ability to obtain unsecured lines of credit. Typically, you put up your own money as collateral, and your loan or card allows you a credit limit of the amount you deposited.
These avenues work as useful ways to rebuild credit without the risks of traditional loans and credit cards.
Seeing the light
Once you dispel the common misconceptions that often plague Chapter 7 bankruptcy, you may find that it could work as a useful debt relief route for your circumstances. In order to ensure that you have reliable information regarding this option, you may wish to utilize local Pennsylvania legal resources.