No one wants to be in a financially difficult circumstance, but the economic recession put many Tennessee families into such situations. Trying to figure out how to manage a significant debt load raises a lot of questions. Many people fear that filing Chapter 13 bankruptcy will ruin their credit score and prevent them from being able to take out a loan in the future. While bankruptcy filings may have some impact on a personal credit rating, it does not necessarily mean that your credit score will plummet dramatically.
It is valuable information to know that personal bankruptcy filings will show up on a credit report. If you file for Chapter 13, then it will show up on your credit report for a total of seven years, and 10 years if you opt for Chapter 7. Even if your bankruptcy filing appears on a credit report when you apply for a car or home loan, your loan application will not automatically be denied. One year after you’ve filed for bankruptcy, you can apply for loans with success so long as you have kept up with the repayment plan.
Furthermore, hanging onto debt and failing to make payments will probably do more to harm your credit score than filing for bankruptcy. If a person regularly makes their payments on time and has not had to deal with collection agencies, but they realize that they are getting over their head in debt, a bankruptcy filing will not necessarily doom their credit report.
Of course, determining whether or not to file for bankruptcy is a decision that should never be taken lightly. Depending on your situation, Chapter 13 may be the best option to discharge some debt and being to repay the rest of it. At the same time, it also may be a way to protect your credit rating from being too badly damaged. Before making a definite decision about a bankruptcy filing, seek out the knowledge you will need to determine what the best choice is in your unique situation. At that point, you may have the opportunity to work your way out of debt and into financial security.
Source: Global Grind, “Wisdom Wednesdays With Lynn Richardson: Myths About Bankruptcy,” Lynn Richardson, March 14, 2012