Declaring bankruptcy is a lot more complicated than it sounds. It’s more than just declaring that you’re not financially strong enough to pay off your debts and having them waived or reduced. It also has a bunch of negative effects on your credit history, and can be especially detrimental to your credit score.
Individuals who file for Chapter 13 bankruptcy do so as a last resort. Debts are definitely overwhelming and often impossible to pay off for consumers, and this legal procedure buys them more time to repay them. They’re allowed to make the payments over a certain period of time while still maintaining ownership of their assets and properties.
However, this step doesn’t come without consequences. Even though Chapter 13 bankruptcy can help you pay your debts, you’ll still have to deal with the fact that the act will show up on your credit reports for the next 7 years. Your credit score will fall significantly, making you a high-risk client for credit companies and lenders. This can make it nearly impossible for you to get approved for another mortgage or loan. It may take you several years to rebuild credit and get back in lenders’ good books.
This is why it’s always advised to first explore all other alternatives before you file for Chapter 13 bankruptcy.
How to Avoid Bankruptcy
So, what can you do to avoid bankruptcy? Here are a few precautionary measures you should adopt:
- Lower your expenses, compartmentalizing the necessities and luxuries
- Prioritize your debts and have a sound game plan ready before you take a loan
- Make sure your payment history reflects well on your record
- Work on your credit score before things take a turn for the worse
- Seek credit counseling or mortgage assistance if necessary
- Sell assets you no longer use or have the need for
- Avoid getting debt consolidation loans or reaching out to debt settlement services
Recover All Investments provides creative financial solutions to homeowners in Texas to help them avoid filing for bankruptcy, unless absolutely necessary. We’re a private group of investors with several years of experience in assisting individuals facing pre-foreclosure circumstances. With our team by your side, you can safely avoid taking any steps that may hurt your credit history.
Get in touch with our team today to learn more about your options to get started!
Preserving Credit and Avoiding Bankruptcy with Loan Modification Assistance
When facing financial hardships, filing for bankruptcy might seem like the only way out, but it comes at a steep cost. Bankruptcy leaves an indelible mark on your credit report for seven years, marking you as a high-risk borrower and making future mortgage approvals nearly impossible.
On the other hand, loan modification provides a path to navigate through financial troubles while preserving and protecting your credit score to some extent. Although it can have a negative impact, it’s often less severe than bankruptcy. Most loan modifications don’t result in a new loan but rather adjust the terms of the original one. As a result, only the missed mortgage payments before the modification will adversely affect your credit.
At Recover All Investments, we offer loan modification assistance to protect your credit during financial hardships, explore all your options, and provide solutions to prevent bankruptcy, ensuring your financial well-being remains intact.
Choose a path that safeguards your credit and secures your financial future; let us do it for you.
