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How can bankruptcy benefit your financial standing?

On Behalf of | Feb 21, 2024 | Bankruptcy

Most people assume bankruptcy will ruin their credit score. They are correct to a degree, but there’s far more to it than that. What many do not realize is that bankruptcy can be the fastest way to an improved credit score.

When you default on your debts, it harms your credit score. Continuing to default is only going to make it worse. When you file for bankruptcy, you draw a line under things and stop the score from declining further. You can then work on rebuilding it.

How can you rebuild your credit score?

To rebuild your score, you’ll need to start borrowing again. Only this time, you’ll need to ensure you meet all repayment dates, otherwise your score will plummet once more.

Some lenders specialize in lending to people who have recently emerged from bankruptcy. You can expect tighter restrictions and higher interest rates, but that may be your best route to a higher credit score.

Bankruptcy demonstrates responsibility

Some people think that anyone who gets into debt is irresponsible. They fail to consider the myriad circumstances that can lead people to that point of financial despair. Redundancy, expensive health issues and natural disasters can strike out of the blue to even the most responsible of people.

Some people refuse to accept that they cannot pay their debts. They just bury their heads in the sand. Filing for bankruptcy means someone has faced up to their reality and made a tough decision.

If your debt is unmanageable, it pays to learn more about bankruptcy. It could be your quickest way to a better future.