Drowning in debt and struggling with looming foreclosure, many homeowners in slumping markets such as Dallas-Fort Worth are looking to bankruptcy to help them rebuild their financial lives. Many debtors facing foreclosure or other urgent debts delay bankruptcy because they fear the impact it will have on their credit score.
Well the truth of the matter is that if you’re behind on your bills your credit score is already taking a serious hit and reducing your chances of getting credit. Allowing your home to go into foreclosure can sink a good credit score by more than 100 points. But with bankruptcy, your credit score may actually increase afterwards because of the debt balances showing $0.
Some creditors may be more willing to lend to a debtor who has filed bankruptcy than someone in foreclosure because they know that it is not possible for you to file bankruptcy again for a number of years. Remember, as the economy is going through a serious crisis, you aren’t alone in facing financial difficulties and filing bankruptcy.
Millions of Americans are filing bankruptcy every year simply because the current economic circumstances call for bankruptcy in many financial situations.
As the government hands out bailout money we need to make sure that credit is still available to those who have filed for bankruptcy and/or gone through a foreclosure. This is critical to restoring the health of the economy which is based on the consumer’s access to and responsible use of credit.