If you are dealing with debt and struggling to pay it off, one of the options you might look into is bankruptcy. Bankruptcy will help you get your debt under control, but it does have the potential to negatively impact your credit score, too.
While many people do their best to avoid bankruptcy due to the damage that it could cause, the reality is that most people who are dealing with debt severe enough to lead to bankruptcy already have credit scores that have dropped due to missed payments or default.
Debt relief options may not impact your credit report negatively
Depending on the circumstances, there is a possibility that debt relief options actually won’t negatively impact your credit at all. For example, if your credit score has already hit the bottom, anywhere from 300 to 580, then any additional damage from a bankruptcy may not really impact your ability to obtain credit or take out loans.
On the other hand, if you get bad debts removed from your credit and are able to start making payments on time, you may see that your credit score starts to climb right away. Instead of waiting to repair the damage, you can take steps to get your finances back in order and to start making a path forward.
If you’re overwhelmed by debt, your credit score probably isn’t helping you
If you’re already defaulting on payments and have excessive debt, it’s unlikely that your credit score is doing you any favors. Instead, it may show financial instability and high risk-taking activities, which lenders don’t usually want to see.
Bankruptcy is beneficial in that it does help you clear your debts and get you back on track. While it may impact your ability to get credit or loans in the short-term, many people begin to see positive movement on their credit reports right away.
If your debt is stressing you out and you’re concerned that you won’t be able to make payments, now is the time to look into bankruptcy and other debt-relief options. Your credit report may not be as negatively impacted as you expect.