Side Effects of Bankruptcy
If you’re considering a personal bankruptcy filing, you're probably concerned about how filing for bankruptcy might affect other areas of your life. While it's true that bankruptcy might have an impact on parts of your life other than how much money you owe your creditors, you may not be aware of what those impacts could be.
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Bankruptcy & Your Credit
One of the things most directly affected by a bankruptcy filing is your credit. Here's a look at how filing for personal bankruptcy protection might affect your credit rating and how potential creditors view you as a credit risk.
- Debt & your credit score: In the months leading up to bankruptcy, when you’re likely falling behind on some payments and the amount you owe your creditors is rising higher and higher, your credit score is probably dropping. This is because credit is affected by a number of factors, including your credit-to-debt ratio, your history of making payments and the diversity of types of loans you have active.
- Your credit score in bankruptcy: When you file for bankruptcy, it shows up on your credit report as a negative action and will likely hurt your ability to secure loans. But, if you truly need the protection of the bankruptcy court, your credit score probably wasn’t that strong in the first place. And the impact that a bankruptcy filing will have on your overall credit will fade as time passes.
- Rebuilding credit after bankruptcy: One of the most important things you can do as you make the transition from bankruptcy protection to post-bankruptcy life is to rebuild your credit. Taking steps to re-establish yourself as a good credit risk can mean the difference between getting loans when you need them and being left high and dry.
Bankruptcy and Employment
One reason some people worry about filing for bankruptcy protection is because of the potential impact it might have on other aspects of their lives. As many people know, it’s common practice these days for employers to view the credit report of a potential employee before making a hiring decision. Bankruptcy could affect your employment opportunities so be prepared for your potential employer to view your credit; otherwise, and you can ask your bankruptcy attorney about how a bankruptcy might affect your employment opportunities in your chosen field and in your state.
Learn about Potential Bankruptcy Side Effects from a Lawyer Near You
If you’re ready to make a decision about whether bankruptcy is the right move for your finances, it may be time to consult with a bankruptcy lawyer practicing in your area.