'Bonus Articles'
Which debt solution hurts your credit score the most?
There are many debt solutions that can give you financial freedom. But you get financial freedom at the cost of your credit rating that can be improved over time. The debt help industry has gained popularity, especially after the recession when consumers are facing the problem of managing their debts. Not all consumers fall behind on payments as a result of cash mismanagement. You may also have to face unexpected incidents that can cause your finances to go haywire.
The different debt solutions (e.g debt consolidation, debt settlement, debt management, bankruptcy, etc.) that can restore your financial peace affect your credit rating differently. One of the debt solutions that hurt your credit score the most is bankruptcy. Most of the debtors file Chapter 7 or Chapter 13 bankruptcy. If you file bankruptcy, it gets recorded in your credit report for a period of 7 to 10 years.
How does bankruptcy hurt your credit score and your financial well being?
If you file bankruptcy, it allows you to make a fresh start as far as your finances are concerned, but it has very negative implications too. The disadvantages of filing bankruptcy outnumber the advantages.
• If you are planning to take up a job in some good company, your employer may refuse to recruit you if you have filed bankruptcy and it shows in your credit report.
• If you intend to buy an insurance plan, you may not get one as per your terms and the insurance carrier may refuse to sell one to you.
• Filing bankruptcy also affects your image negatively and if you want to rent space, the landlord may turn down your request and refuse to rent out his space to you.
• You will not be able to avail fresh credit and lenders will usually shy away from approving credit to you.
Just as bankruptcy gives you a fresh start, it also inflicts mental injury and it takes a lot of time to regain your own self confidence and also win the confidence of lenders, employers, homeowner or your insurance carrier. However, filing bankruptcy is not the end of the world. You will get ample opportunity to repair your finances. Try the other debt solutions that are regarded as bankruptcy alternatives and don’t allow your debts to reach a point when you are left with bankruptcy as the only debt solution.