When people in Connecticut find that they can no longer keep up with their financial obligations they may consider filing for bankruptcy. Even so, they may be reluctant to go through with it for some time. There are two main reasons for hesitance: losing assets and the hit to their credit score.
NerdWallet, a personal finance company, notes that Chapter 7 is the most common and the fastest way for consumers to file for bankruptcy. While it may involve giving up some assets, such as a car or jewelry, most filers actually get to hang on to their belongings. In return, most unsecured debts are forgiven and the filer can focus on paying off the rest. But, what about your credit score?
Credit Karma, a multinational personal finance company, recommends that filers begin the recovery process by regularly checking their credit reports. Look for errors and dispute any found with the credit bureaus. The company warns consumers that a Federal Trade Commission study found that 25% of U.S. consumers used this method to spot errors that could affect their credit score. By resolving these errors, a person’s credit score may climb upward.
Another option is to consider a secured store card or credit card. Secured cards often require consumers to pay a deposit upfront, which protects the lender while the account holder rebuilds credit. Note that some lenders will not approve a person for the card until bankruptcy proceedings have closed. Store cards tend to have less strict credit requirements than a regular credit card, making them potentially easier to get.
Finally, consumers may ask for on-time payments to be reported to the credit bureaus. Some common payments to consider include phone bills and rent. Note that not every lender will use that information to calculate credit worthiness, but it may be worth including all the same.