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.
Have you recently been injured by something that was the fault of someone else? Are you finding it hard to go back to work but the insurance company is refusing to compensate you for your losses? Unfortunately, there are times when filing an insurance claim simply isn't enough to get the money that you need and deserve; sometimes you have to file an actual lawsuit for this to work. While you are technically legally able to file a lawsuit on your own behalf, it's really a better idea to hire a personal injury lawyer to take care of things for you.
If you are still trying to decide if you should go through with Chapter 7 bankruptcy, it is important not only to view how it will help your financial state but also to see how it will affect your life afterward. Here are four things you should expect after filing for Chapter 7 bankruptcy.
Creditor harassment will end
People who file bankruptcy often do so because they have major amounts of debt they cannot pay and their creditors are on their backs trying to collect this money.