How bankruptcy affects a person’s credit
Medical debt is the top reason people apply for bankruptcy although there are a number of reasons a person may fall into debt. Some Florida consumers might consider filing for bankruptcy but might be concerned about how it will affect their credit record and how long it will remain on that record. Depending on the type of bankruptcy, it remains on a credit report for seven to 10 years.
There can be other consequences for bankruptcy filings. For example, some employers may do background checks on people and reject them if their credit is poor. Home, auto and other types of loans may be hard to get. Furthermore, some debts, such as student loans, child support and delinquent taxes generally cannot be discharged in a bankruptcy.
With a Chapter 13 bankruptcy, a person works out a payment plan to repay some debts and may keep some assets. In a Chapter 7, a person is allowed to keep some assets, but others may be sold to repay creditors. After filing for either kind of bankruptcy, a person can begin rebuilding credit. This should involve paying off accounts in full and on time. A person who is unable to get a regular credit card may be able to obtain a secured one. Being added as an authorized user on a responsible person’s account may also help.
Overwhelming debt can happen because of job loss or divorce, and filing for bankruptcy can be a financially responsible decision in some cases. It allows a person to start fresh and begin a new financial life. Furthermore, although bankruptcy hurts a person’s credit, so do unpaid debts and accounts that go to collections. A person may even face lawsuits and wage garnishments. However, filing for bankruptcy puts an end to these actions as well as immediately stopping creditor harassment.