While bankruptcy is often considered negatively, it’s benefits should also be considered. First and foremost is the fact creditors do not always look down on filing bankruptcy. Why? This blog guide goes over how bankruptcy can both positively and negatively affect your relationship with creditors.
The Good
This may be controversial: bankruptcy can improve credit ratings. In the long run, it may in fact help you build a better credit score than you had. But the main point here is who will be issuing you credit. Put yourself in the creditor’s shoes: would you rather give credit to someone with $100,000 in debt, or someone who is working and recently discharged a large debt? The fact is, the one who filed bankruptcy may have more money available. You also may have learned your lesson, and want to rebuild your credit score by paying all bills on time.
So in other words, you may have a better chance of getting new credit lines after bankruptcy. It’s just commonsense.
The Bad
Not all creditors will look at your bankruptcy as a good thing. It does hurt your credit score, and if a creditor can choose between someone with perfect credit and terrible credit, the choice is obvious. Some lenders have more options, so they choose to give to the one with a better credit score. And remember that bankruptcy does affect your credit score, taking years to rebuild.
Other Benefits
While these are some controversial topics, for Texas home owners and residents filing bankruptcy is a clear solution. It can save you from either debts you can’t afford or protect assets you want to keep. A Texas Chapter 7 bankruptcy, the most common form of personal bankruptcy, can effectively give you the opportunity to get a fresh start, open up new credit lines, and save money. Chapter 13 mean paying via debt repayment plan, but the benefit here is you’re in a better financial situation to rebuild.
If You’re Unsure
You should not make key decisions via topics you read online, but hopefully this guide has given you some hope. If you’re unsure on how bankruptcy works, reading online guides is smart, but consulting with an experienced Texas bankruptcy attorney is your best option. You can find many experienced attorneys more than willing to explain the advantages of bankruptcy.
