One of the biggest fears surrounding a bankruptcy filing is the effect this financial move will have on an individual’s credit rating. Specifically, Connecticut residents who file for Chapter 7 bankruptcy are often concerned they will be unable to secure loans after filing. In fact, at least in the case of car loans, the opposite is sometimes true.
The point of a Chapter 7 filing is to pay down or otherwise discharge existing debts that threaten to become overwhelming. A bankruptcy trustee is appointed by the court, who works with the debtor to determine what assets can be liquidated to pay down creditors. Unsecured debt left behind, including credit card debt and other forms of debt, can then be discharged by the court.
It is important for debtors to ensure the filing is discharged and not dismissed — in the case of a dismissal, loans will be harder to come by. But if the case is discharged, someone seeking a car loan could retain the services of a specialized dealership focusing on sub-prime loans. They can work with the customer to come up with a loan rate and period that works best with their limited credit score. This, in turn, can help the customer to regain credit more quickly.
A Chapter 7 bankruptcy filing does not represent an end, but rather a new beginning. With the help of a qualified bankruptcy attorney, a Connecticut resident can work to rebuild his or her credit after debts have been wiped clean. In less time than one would think, that individual is back on the path to financial stability.