When thinking about the possibility of filing for bankruptcy, one of the first things that you’re likely going to worry about is what kind of effect these proceedings will have on your credit score. Because of how many important financial decisions revolve around our credit score, it is not unreasonable at all to feel concerned about what will happen once the bankruptcy process is complete. Especially considering that bankruptcy can continue to be part of your financial history for up to ten years.
Keep in mind that bankruptcy is not the only thing that can negatively impact your credit score. Foreclosures, judgments by the court, liens, repossessions, missed payments, and other questionable activity will all ultimately look bad on your credit report. If you’ve reached a point where you’re giving serious thought to the possibilities of filing for bankruptcy, then the state of your credit report should probably be one of your lesser concerns. After all, losing your home or having your vehicle repossessed is likely going to impact you on a much more serious level than your future credit reports. At Davis, Ermis & Roberts, we care about every client. We are a team of experienced bankruptcy attorneys in Dallas who can represent you during your case and walk you through the proceedings every step of the way. Here are some facts you should know about filing for bankruptcy and how it could affect your future finances.
Understanding the Automatic Stay
Once the process of filing for bankruptcy has started, a system known as the automatic stay will go into effect. Its purpose is to halt all collection attempts that may currently be active involving various debts you owe. One of the benefits of filing for bankruptcy is that you are given time to reassess your financial situation so that you can make the best possible decision about your next course of action.
While you may not be in an actionable position to borrow more money at this point, it is important to ask yourself whether or not borrowing additional funds is in your own best interests. Reaching the point of bankruptcy means that you need a way to remove existing responsibility to pay back some debts while freeing up income to address core needs. Taking on additional debt may seem helpful in the short term, but could lead to even more headaches down the road.
Accept the Credit Score Impact
Your credit score will most certainly be lowered when filing for bankruptcy. A loss of anywhere from 150 to 200 points or more is to be expected. At the same time, it is important to recognize that the alternative in most cases will be the loss of your home and other assets such as your vehicle. Saving your credit score may seem like an essential part of any future success, but there is a point where making sure that your existing assets are protected must be the top priority.
Even though a bankruptcy filing can stay on your credit history for up to ten years, engaging in regular activities such as paying your bills on time and avoiding high-interest loans that will put you back in debt can help your lowered score. By making sure to handle all your financial responsibilities in a timely, efficient manner, you could become eligible for a variety of financial packages much faster than you expected.
Stay Focused on Secured Payments
Certain financial obligations like your home or your car will still need taken care of, even after filing for bankruptcy. Because keeping those assets is an essential part of your daily quality of life, it is important to make every possible effort to avoid the possibility that they will be taken away. Also, having your home or car reclaimed by your lender will ultimately have the same negative impact on your credit score as filing for bankruptcy would, and these actions will remain on your credit report for just as long. Ultimately, the best choice in some situations is to file for bankruptcy to minimize existing debt while focusing on the payments that matter most.
Davis, Ermis & Roberts: Your Trusted Dallas Bankruptcy Team
At Davis, Ermis & Roberts, our team has spent years helping the residents of the Dallas-Fort Worth, TX area deal with a variety of civil and criminal legal concerns, including bankruptcy. If you’re feeling trapped by debt while trying to decide whether or not bankruptcy could be the answer you need to turn your life around, don’t hesitate to reach out to our office so we can schedule a consultation and work with you to make the best possible decision for your future.