Bankruptcy and rebuilding credit is a hard topic to tackle. It requires some thinking and analysis before making any decisions.
I am an experienced Bankruptcy Attorney in Atlanta and here are some of my thoughts on this subject that my clients have found useful:
Bankruptcy should be viewed as a last resort option.
It is only when you cannot handle your debt anymore that you should consider bankruptcy. For example, if your house is about to be foreclosed and you must keep your home, Bankruptcy can be viewed as the last resort option. So if the home must be saved, then the question of what impact bankruptcy will have on your credit is not very significant. The same is true if you are facing garnishments and auto repossessions.
Credit does not define you as a human being.
In my dealings with thousands of ordinary people considering filing for bankruptcy, I have found that many people define their self-worth with their credit score. All human beings are more than their credit score. Unfortunately, our society has been conditioned by lenders, banks, car companies, and mortgage companies to view the credit score as a defining measure of a person’s self-worth. That is just not the case. Think of what is right for you and your family and forget the rest. If you and your family are experiencing significant hardship, think of the overall picture of your life and don’t let societal pressure force you and your family into making a decision that make your life worse.
Credit Score can be improved by only borrowing.
In other words, you have to keep on paying interest to different creditors each month to improve credit score. How about you keep your money and forget this credit score? That sounds good to me! It is true that you can get a credit card for free and pay it off each month and not pay any interest and fees. The statistics are against you. Borrowing is like playing with fire. You can get burned. So why play? You want to be careful with credit lines after bankruptcy when trying to rebuild credit.
Credit Score can be rebuilt.
I have also found that people view the impact of bankruptcy on the credit score as something that cannot be reversed. Not true. You can rebuild credit. How? By borrowing, and yes there will be plenty of lenders that will loan you money and will be glad to take interest payment from you.
Life without credit is not so bad. It is actually kind of good. What am I saying, it is great! Can you imagine a life without creditors and the stress of making payments each month? Credit is not free. You don’t need it. Creditors want you to think you need it. That is how they make their money.
Lenders are not your friend.
Often people think they need credit they can use in a rainy day. The opposite is true. Actually, as soon as they find out that you are having difficulties, they are likely to lower the amount you can borrow and raise the interest rate as well. In order to rebuild your credit you will have to always keep this fact in mind.