People may not realize just how much their credit score matters. It can be the determining factor in whether a Georgia resident gets a home or car loan, can make a purchase or qualify for educational assistance. There are many things that can negatively impact one's credit, and filing for bankruptcy is one of those things.
When a person files for Chapter 7 bankruptcy, which is sometimes referred to as liquidation bankruptcy, they commit to selling off assets in order to come up with money to pay off their lenders and creditors. Often times they must settle their debts for less than what they owe, and this can leave creditors uneasy about lending them money again in the future. Because of this, a person's credit score may drop to identify them as someone who has not managed prior credit accounts well.
A bankruptcy is a big red flag to credit agencies and lenders. In fact, when a person files for Chapter 7 bankruptcy, the bankruptcy will linger on their credit score for an entire decade. During that time the debtor may struggle to find other credit options and rebuild their credit score so that they again can be recognized as a trustworthy borrower.
Bankruptcy can affect a person's credit options and credit score in a negative way. However, despite these issues, it may still be a good option for them to get out from under oppressive and burdensome debt. A bankruptcy attorney can provide a person with more questions about this topic with the information they need to make a good decision about whether to file for bankruptcy.