When a person or business is unable to pay debts, sometimes the solution is to file for bankruptcy. Though these filings have been on the decline recently, experts believe the numbers will soon rise. Most people here in Michigan understand that filing for bankruptcy will have an impact on their finances, but they may not understand exactly what that means. For one thing, it can have a significant effect on a person’s credit report.
The first matter is how long the bankruptcy actually stays on a person’s credit report. In the case of Chapter 7 bankruptcy, it will show up on a credit report for 10 years. For Chapter 13 bankruptcy, it is only there for 7. Though that may seem like a long time, the good news is that the impact will lessen over time. A bankruptcy can’t be totally removed before the proper time has passed, but reports of delinquent accounts may drop off before then.
For those who file for bankruptcy, there are still ways to improve their credit report even if the filing is still there. If the person makes a point to pay bills on time, reduce debt and cultivate helpful financial practices, this can all go a long way in improving one’s credit score. If the person cannot obtain a regular credit card, he or she may apply for a secured one, which requires a cash deposit up front.
In any case, filing for bankruptcy should be no cause for shame, as it is something many people have to do at some point during life. It may be a good idea for those here in Michigan considering this option to consult a bankruptcy attorney. Doing so can help ensure that the process is completed properly, getting the person off on the right foot to a new and better financial future.