Are you in a financial situation where you need to file for bankruptcy, but you are not sure which version is best for your situation? If so, it will help to know how Chapter 7 and Chapter 13 bankruptcy are different so that you can pick the best one for your situation.
Credit Report Impact
Know that any bankruptcy is going to affect your credit report since lenders will be able to see that you used bankruptcy in the past and they will be less likely to loan you money.
Bankruptcy is an opportunity to take back some control of your financial situation. It is wise to try to make the most of it, but how can you do so? A bankruptcy law attorney will tell you to approach the situation with these four things in mind.
Patience Before Filing
When someone decides to file bankruptcy, they may just want the whole mess to be over as soon as possible. However, the biggest mistake you can make is filing so quickly that you overlook something important.
If you are facing financial hardship, you may consider declaring yourself bankrupt. While this process may be an effective way to stop collection activities and get a fresh start, it's essential to remember that the procedure is complex. You have to ensure you file the right type of bankruptcy and follow the required steps to succeed.
Doing all these tasks on your own may be difficult, mainly because you aren't a bankruptcy law expert.
One of the main reasons many struggling borrowers put off or discount the idea of bankruptcy is that it will damage their credit score. And while this is certainly true on some level, the damage may not be as bad as you think it will be. Why? Here are five of the most important reasons bankruptcy is unlikely to ruin your credit score.
1. Your Score May Already Be Bad
A Chapter 13 bankruptcy is a special form of bankruptcy for an individual. Unlike the common perception of bankruptcies, in which your debts are discharged and you begin with a fresh start, this type of bankruptcy is reserved for people who have more money going out than coming in and limited assets to liquidate. A Chapter 13 bankruptcy is often best for someone who is barely meeting their monthly commitment or is just now falling behind.