One of the most challenging things that you think about when you are deep in debt is how you are going to manage to make at least the minimum payments. Some people come to realize that no matter how they adjust the budget, there isn’t going to be enough money at the end of the month.
You can opt to keep making the minimum payments while continuing to accrue interest or you can choose to do something about the crippling debt. Filing for bankruptcy is one option, but make sure that you find out how it might impact you before you file.
Drop in credit score
You can expect a drop in your credit score when you file. It will gradually go up, but you can’t obtain new credit when you have an active bankruptcy case. You can begin rebuilding your credit shortly after you receive the discharge by getting a secured card and using the information you learned from the credit counseling and financial education.
Relief from collection attempts
Collection attempts can make life unbearable. When you file for bankruptcy, you receive an automatic stay. This prevents creditors from being able to contact you so you can answer the phone or check the mail without having to worry that one of them is pressuring you for money.
Living on a budget
You will learn how to live on a budget. This is a good life skill that can help you to handle money forever. Once you set your spending plan, you will know where your money is going. You have the chance to fine-tune where the money goes.
Impacts on employment and insurance
The drop in your credit score might affect you in ways you don’t expect. You could end up having to pay more for insurance, and you may not be eligible for specific jobs due to that dip. Shopping around for insurance and checking on whether your preferred career requires you to have a particular credit score is beneficial if you need to file bankruptcy.
Future financial freedom
Once your case is done, you won’t have to worry about the bills that were part of the bankruptcy. You can start your life off on the right financial footing. By using what you learned with the education you underwent during the case, you have the backing you need to make sound decisions about your money.