When we were young, no one ever really taught us about tricky financial situations like credit card debt, owing money to the IRS at tax time, or going through bankruptcy. Unfortunately, many of us have had to learn these lessons the hard way. Interest on loans and credit card bills can sneak up on the best of us. But the good news is that you’re not on your own anymore; there are resources available to help.
If you can catch it early enough, bankruptcy can often be avoided. It might seem impossible to dig your way out of a financial hole that was years in the making, but it can be done. The first step is reducing your debt.
But sometimes, the problem is too far gone by the time we catch it. If that’s the case, just remain calm and open-minded; you still have options, and like everything else, this problem is temporary.
If you’ve found yourself facing down bankruptcy (either officially or potentially), you might be wondering about the implications of doing so. How long bankruptcy will stay on your credit report will depend on what type of bankruptcy classification you pursue. The two most common debt reduction or elimination bankruptcy classifications are Chapter 13 and Chapter 7. A Chapter 13 bankruptcy will stay on your credit report for up to seven years, while a Chapter 7 bankruptcy will stay for up to ten.
So, what’s the difference? The biggest distinctions are the length of time that the bankruptcy remains on your credit report and what happens to your possessions:
Bankruptcy in any form will hurt your credit, but the impact will decline over time. If bankruptcy seems like the only path left to take, carefully consider your options first, and come up with an individualized plan for rebuilding your credit and securing a healthy financial future.
There are typically some tell-tale signs that you’re heading toward bankruptcy. If you’re missing payments, receiving regular calls from debt collectors, you’ve run out of credit, and you’ve tried taking out a home equity loan that didn’t help, you may be on your way.
But bankruptcy is meant to be a last resort. It’s not only damaging to your credit, but it also comes with costs that can make the situation harder, especially if you plan to hire a bankruptcy attorney. Before you file, it’s important to consider what else you can do first:
You can try any combination of the above strategies to see what works best for you and will help you avoid bankruptcy. If you’ve already tried these or you’re looking for more, consider ways to make money and save such as reaching out to your phone provider to lower your rates, or shopping around for better rates on your savings account. Sometimes even the simplest of methods can really help to add up to more money in your pocket.
Our company specializes in helping borrowers like you who need emergency financial assistance, and you can contact us here if you need information, guidance, or assistance.