I try really hard to give good news on this blog. Bankruptcy isn’t nearly as scary as people make it out to be. Unfortunately, everything can’t be rainbows and unicorns.
Bankruptcy will most likely hurt your credit. It’s a fact. In the days immediately following your bankruptcy, your credit score will take a hit.
So…knowing that, does that mean I shouldn’t file bankruptcy?
I frequently meet with clients who are literally drowning in debt but are worried about their credit report. They put a miserable little report ahead of their own financial and likely personal health.
They have a misguided belief that once they have damaged their credit, it will never heal or be the same again.
That’s simply not true.
A credit report is a snapshot of a period in time.
It WILL recover, probably quickly.
A credit hit is like a scratch, it will heal
No matter your choice, whether it be debt settlement, debt management or bankruptcy, your credit report will get dinged in the short term.
Instead of worrying that it will be a death knell, think of it more as a scratch.
It bleeds, you clean it and bandage it (think of bankruptcy as this part), it scabs over and eventually heals .
Once it heals, there may be a scar…but that fades over time, just like the damage to your credit report.
Debt is like a disease
When you can’t actually pay your debts off, it’s like a chronic disease.
There are symptoms that just don’t go away, sometimes getting worse and worse.
But know this, debt will drain your energy, consume your thoughts, limit your opportunities and make you mentally unhealthy.
Additionally, if you’re already in this much debt, chances are, your credit report already tells a much different story than you like to think.
In fact, it may not be doing you any good at all.
The balance sheet matters most
Like I said before, your credit report is a snapshot of a period in your life. It is, by its very nature, limited.
As time goes by, things fall off, never to be heard from again.
If you use the bankruptcy code, you will change the balance in your favor. The balance sheet that is.
Bankruptcy has the ability to wipe out your debts, on the spot.
It stops collections, eliminates unsecured debts and clears your balance sheet in one fell swoop. Immediately.
Yes, the bankruptcy filing will show on your credit report, but the further down the road you get, the less it matters to lenders. Also, with your old debts gone for good, you’ll look like a much more creditworthy individual.
When you take the steps to get financially, emotionally and physically healthy, the credit health will come and your credit report will heal.
When you’re ready to take that step, call me.