Perhaps you’ve consolidated all the bills you can; you cut back on expenses and even considered working with your creditors to settle your debts for a lower amount. You may have even looked into credit counseling agencies but decided against it after talking to other people and doing some research online.
Finally, you reached the conclusion that perhaps should have come sooner — you need to file for bankruptcy. Your biggest issue to the point with filing has been concerns about your credit rating. The fact that bankruptcy will affect your credit rating is unavoidable, but it does not have to remain that way forever.
How low can you go?
No, that’s not a question about the limbo. It’s a question about how low your credit score can drop when filing for bankruptcy. No one can give you an exact number regarding how many points your score will drop. That largely depends on the contents of your credit report and your current score.
In general, the higher your credit rating when you file, the more points it will drop. Most people end up with a score in the low to mid 500s after a bankruptcy, which is why those with higher scores drop more than people with lower scores prior to filing. You may already have taken significant hits to your score if you have trouble paying your debts, however.
You also may want to take into consideration the fact that not filing for bankruptcy could end up costing you more in your credit rating as you continue to struggle financially and can no longer make payments on your debts. Moreover, once your bankruptcy is over, you can focus on repairing your credit, which could happen faster than you realize.
How much longer can you go?
Feeling buried under a mountain of debt not only affects your finances but also your health and your personal relationships. The stress can be overwhelming, and your frustration could remain high. After you file, you should be free from most, if not all, of your debts and perhaps have more money left over at the end of the month.
Enjoying the reduction in stress and frustration seems like an easy trade off to rebuilding a credit rating for many people who file. You could also enjoy having a clean slate and a fresh financial start. If done right, the only way your credit score will go after a bankruptcy is up as you rebuild your financial life.
If you decide to take the plunge and file bankruptcy despite the hit your credit score will take, you may find yourself in a better position in the future than you could have imagined.