Debt is no stranger to many American families, as the average household carries considerable debt of different types. Some Connecticut residents know just how quickly credit card debt can mount, or how an unexpected illness can lead to crippling medical debt. This is why it is important for residents to understand how Chapter 7 bankruptcy influences a credit score from the day of the filing through to the end of the bankruptcy period.
It is important to look at bankruptcy not as a failure but as a chance to begin anew. When a Chapter 7 filing takes place, a court-appointed trustee takes an account of all an individual’s assets and debts to determine which of those debts can be discharged by law. This typically includes unsecured debts like credit cards. Debts that cannot be discharged must be paid through dissolving assets.
While it is true that a bankruptcy filing stays on a credit score for up to ten years, there are many ways to mitigate the impact of Chapter 7. Some experts suggest taking out smaller, credit-building loans or applying for a secured credit card. Paying bills in full and on time can also improve a credit score while the bankruptcy is still on the books. Ultimately, these steps have the potential to return a resident to financial health.
Chapter 7 bankruptcy can sound scary, but it should be noted that even with the impact on a credit score, it is infinitely preferable to financial collapse. Connecticut residents struggling under heavy debt cannot put a price on the peace of mind that comes with discharging and paying down those debts. With the help of an experienced bankruptcy attorney, the path to financial stability is considerably shorter than many people have been led to believe.