For many Ohio residents, filing for bankruptcy may seem to be something that is only done by those who have no other choice. While declaring bankruptcy is a serious decision, it can actually work to restore a person’s credit rather quickly in addition to the other benefits it can provide. According to a recent report by the Federal Reserve Bank of New York, people who are constantly in debt or who repeatedly default on a loan have lower credit scores than people who file for bankruptcy.
Before people decide to file for bankruptcy, they should consider how it could affect their future. For example, a bankruptcy filing can provide some relief to people who are struggling to make their payments and who find themselves sliding further into debt. It can also put a halt to harassing and unwanted collection activities. Bankruptcy makes sense for those who find themselves using credit cards to pay for necessities such as gasoline and food in order to use their money to make a loan payment. It can also relieve those who have several debts that they are unable to pay consistently.
One misconception regarding bankruptcy is that it will prevent a person from obtaining a line of credit for things like a home or a car. Although bankruptcy remains on an individual’s credit report for a decade, many people have been able to obtain a loan with an acceptable interest rate in only a few years after the filing.
Filing for bankruptcy protection may be an appropriate solution for those who are in dire financial straits. An attorney can analyze a client’s financial situation to determine whether bankruptcy is a preferable alternative to other forms of debt relief that may be available.
Source: The Huffington Post, “The Fresh Start of a Bankruptcy May Restore Credit Faster”, Richard Gaudreau, March 5, 2015