Rebuild credit

Rebuild Your Credit: File Bankruptcy

One of the biggest myths about bankruptcy is that it destroys your credit. People believe that if they file bankruptcy they will never again have good credit. But let’s look at some of the alternatives and how they impact your credit.

Continuing to Do What You’ve Been Doing

If you are having financial problems, you are probably dodging phone calls from creditors, robbing Peter to pay Paul, and waiting for the other shoe to drop. You may be using credit cards to buy food, pay your rent/mortgage or car payment, or even to pay other credit cards. All the while you’re watching your credit card balances creep closer and closer to their limits.

You know if something doesn’t change, and soon, you’re going to be behind on all your bills, facing late charges and over the limit fees. And your credit will quickly go down the tubes. You’ll continue to struggle and things will get drastically worse until your car gets repossessed or you get sued by one or more of your creditors.

And God forbid that you have a medical emergency or your car breaks down. Where will you get the money to pay these unexpected bills?

Debt Settlement

Most creditors expect you to be at least three months behind before they will even consider a debt settlement offer. If you’re three months behind on any of your bills, then your credit has already taken a hit. Having said that, debt settlement is not all it’s cracked up to be because:

  • Some creditors require you to pay the settlement amount in a lump sum;
  • Some creditors continue to report the debt as delinquent until the settlement amount has been paid in full;
  • Some creditors continue to charge interest until the settlement amount is paid in full;
  • Collection calls will continue;
  • The forgiven debt is taxable by the IRS.

If you use a debt settlement company to negotiate with your creditors, you will often be charged an upfront fee as well as a percentage of the amount of the debt which is forgiven.

Credit Repair

As with debt settlement companies, companies offering to repair your credit often charge excessive fees and are unable to deliver on all the promises they make. There is really nothing that a credit repair company can do for you that you can’t do for yourself. What most credit repair companies do is dispute every derogatory item that appears on your credit report. Although some disputes may be legitimate, most are not. Frivolous disputes can actually damage your credit even further. Moreover, such disputes can actually trigger renewed collection efforts by creditors and collection agencies.

So, What Makes Bankruptcy Better Than Debt Settlement or Credit Repair or Doing Nothing?

First off, bankruptcy is absolutely legal and our bankruptcy attorneys are licensed and trained professionals. . .no scams here!

Next, if you’re like most people, by the time you even begin considering bankruptcy, your credit is all ready shot. Filing bankruptcy won’t damage it much more.

Finally, filing bankruptcy can actually raise your credit rating almost instantly because aging of delinquent accounts will stop.

Let’s be realistic, okay?

If you are behind on your bills or you owe lots of money to a bunch of different creditors, you’re probably not in the market for new credit and, more importantly, no one is going to lend you money or give you a credit card anyway! And if you don’t do something to change your financial picture, you’ll never be able to get credit.

When you file bankruptcy, you’re making an investment in your financial future and positioning yourself to begin rebuilding your credit sooner rather than later. The first step in this process is getting rid of debt. By eliminating debt, you lower your debt to income ratio which makes you less of a credit risk in the eyes of banks and other creditors. This means that in the future you’ll actually have the ability to make the payments on new credit.

If don’t file bankruptcy and you continue doing what you’ve been doing – paying late, making the minimum payment, etc. – it will literally take you eight to ten years or more to get out of debt. And all the while interest will continue to accrue and most of your monthly payment will be applied toward interest.

But, if you file bankruptcy:

  • Interest will stop accruing;
  • No late charges will be assessed;
  • No over the limit fees will be assessed; and. . .

In the case of unsecured debts such as credit card bills, you may even be able to wipe them out without paying those creditors one thin dime!

Bankruptcy is the only sure fire way to get out of debt and improve your overall credit picture. If you file a Chapter 7 case, you can eliminate most of your unsecured debts in as little as three months. While Chapter 13 bankruptcy takes longer and may require you to pay a portion of your unsecured debts, it’s still a great option, especially if you have a home or other property you want to keep.

Don’t Be Ashamed to File Bankruptcy!

Bankruptcy is 100% legal and it’s meant to help good, hardworking people just like you get the fresh start they deserve. At Bankruptcy Professionals we are committed to helping you navigate through the bankruptcy process. Our bankruptcy attorneys want to make filing bankruptcy as stress free as possible for each of our clients. So, they will answer all your questions and explain how bankruptcy works until they are sure that you understand.

Give us a call today! 888-970-1090 We’re waiting to help you with your bankruptcy!

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