Filing for bankruptcy can be a stressful process, especially if you aren’t sure how it affects you and your family, or if it is right for you. Before you decide to file for bankruptcy, it’s best to break down what exactly is happening when you do this.
What happens to my finances when I file for bankruptcy?
When you file for bankruptcy, a large number of your debts are put on hold and frozen for the time being. This can be an instant relief since creditors will stop asking for money and your wages will not be withheld. Debt is something that can build slowly but steadily over time, to the point that it becomes insurmountable. It may start affecting your family and your home life since trying to live in deep debt can be highly stressful. You might even feel like there’s no way out.
Once your bankruptcy is approved, you will be low on money, of course. However, having the relief of frozen debts and a fresh start will lead to eventual healthy financial stability. However, there are side effects. Your credit score will drop, but this is not permanent. A credit score is something that is constantly changing and can be boosted thereafter. The first step to financial freedom is declaring bankruptcy, having your score plummet, and then building it back up after. If you never declare bankruptcy, you will never be able to free yourself from suffocating amounts of debt.
How to boost your credit score post-bankruptcy?
Start by paying your bills on time. Don’t overspend, so you can slowly start building your money back up and succeed in paying off your bills in a timely manner. On top of this, don’t start building up debt again. The key to not building debt and paying your bills on time is to spend wisely and act very frugally. Take time to sit down with your family and discuss financial matters, what is necessary, and what can be temporarily suspended from being bought by your family unit. Honesty and open communication are important for this to work.
Lastly, the final downside of bankruptcy that you must spring back from is that your bankruptcy will appear on your credit reports for the next seven years from the original filing date. Your credit reports will notate which debts were included in the bankruptcy, and when they first became debts. However, don’t be discouraged. Employers are legally not allowed to fire you from your job if you file for bankruptcy, as per U.S. Code, Title 11, Chapter 5, Subchapter II, Section 525[b], outlining protection against discriminatory treatment.
If and when you apply for a new job, employers are allowed to check your credit, but they are also legally forbidden to not hire you based on the fact you filed for bankruptcy. KE Law can help you through the bankruptcy process and hereafter when you need to rebuild your credit and get back on your feet.