Rebuilding your credit will take time. For many people, filing bankruptcy is taking a step towards that. Paying off your debts in full in a reasonable amount of time is the best way to help your credit. The reality of accomplishing this for most people, once they fall significantly behind in their monthly payments and overall debt amount, is remote at best. Most people cannot pay off debt at interest rates ranging from 10% to 20% with a debt load of $10,000 or more. Your situation may be different. We'll discuss it when you come in to see us.
In this situation, bankruptcy is the most realistic way to start the process of rebuilding your credit. At first, filing bankruptcy will hurt your credit. However, it will not hurt it any more than not paying off your debt now. Once the bankruptcy case is over, you can start making timely and complete payments on any future debt you have. Over time, lenders will begin to lend to you again. This process of paying back money on time will help rebuild your credit.
There is no guarantee that filing bankruptcy will help your credit. However, because your debt is gone, after you file your debt-to-income ratio will improve. By maintaining steady employment and staying current on your existing bills, your credit rating may improve over time.
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