Usually, one of the first things people think of when filing bankruptcy is ruining their credit rating. While it’s true, the bankruptcy will stay on your credit report for up to 10 years; filing bankruptcy won’t be the only thing reflecting negatively on your credit report if you are behind in your debt payments.
When a lender sees bankruptcy or default on loans on your credit report, they may not give you the credit you are asking for. The creditors that will provide you with credit will often do so at high-interest rates.
Losing Your Home or Car
When you are behind in your bills and struggling to keep up, maybe your credit rating shouldn’t be your primary concern. If you continue to miss payments and stop paying on some bills altogether, your creditors can take legal action against you. Sometimes this means taking your home, your car, or suing you and garnishing your wages.
By filing bankruptcy, you get an automatic stay, and the creditors legally must stop all collections attempts against you, and that includes any legal action. Filing bankruptcy wipes out all of your qualifying debt, usually including credit card debt, payday loans, medical bills, and other non-secured debt.
Keep Making Secured Payments
If you are behind in your secured debt like your home and your car, you will have to continue making those payments even in bankruptcy if you want to keep those assets.
If you don’t file bankruptcy and end up losing your home or your car, those instances will stay on your credit report for up to seven years giving you the same negative score as bankruptcy would, the difference is in bankruptcy you are no longer legally responsible for paying on your discharged debt.
If you are behind in your payments and worry about legal actions being taken against you, contact a Fort Worth bankruptcy attorney to discuss your options.