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How Filing Bankruptcy Will Ruin Your Personal Credit Rating

Jan 9, 2008
Filing for bankruptcy is never really a good thing. It basically shows that you have spent money that you do not have using credit, and you cannot pay back that money to the creditors you borrowed it from. It shows up on your credit report that you have gone bankrupt and stays there for several years, making it very difficult to have the kind of access to credit that you normally would had it not been there.

However, filing for bankruptcy may be the only option you have, and it could end up being a better option in some cases, though it is not really a very good solution to your credit woes. So should you file for bankruptcy if you are in desperate need of money to pay your creditors but simply cannot come up with it, or should you tough it out? How do you know the difference between when you need to file for bankruptcy and just a downtime?

There are a few signs you should look for to know when you should file for bankruptcy. However, there should be a few things you consider before you file for bankruptcy.

Here are a few options you should look at first: There are several credit counseling services that may be able to help you get out of your tough financial situation. There are certain credit counselors that are willing to help you rearrange your budget so that you can better pay your bills. They will help you manage your money more wisely, so that you spend less on things you don't need, therefore having more money to pay your creditors.

You can also call your creditor up and ask them to rework your payment schedule so that you pay less monthly. Many creditors would much rather work with you so that you pay them back in full, no matter how long it takes, rather than have you go bankrupt. If you go bankrupt, they will most likely not get the money back, but simply have to let it slide.

You also have the option of borrowing money from family or friends. This is also a better solution than bankruptcy. It allows you to get your bills paid without doing any damage to your credit score, and you can repay them without having to pay interest.

If there is no other option for you rather than bankruptcy, then do it. It would be better to do so than to drag yourself through the stress and turmoil of trying to make ends meet. Filing for bankruptcy isn't the end of the world, and your credit report will eventually be wiped clean of it.

Yes, it will be difficult. Getting credit after bankruptcy is not easy. However, the credit that you are permitted to have, if used wisely, can help build your credit score up again, so that when the bankruptcy is removed from your report, it will perhaps be even higher than before.
About the Author
Court is an author and expert on private student loans and unsecured personal loans.
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