For many Ohio residents, the negative stigma surrounding bankruptcy may result in their forgoing this option for debt relief. For you and others, the idea that the process may wreck your credit score with no chance of recovery could play a significant role in your hesitation toward following this route. However, you may find it beneficial to understand that bankruptcy will not permanently lower your credit score.
After completing the bankruptcy process, your score may have some negative impacts. If you closely consider your situation, you may realize that your overall debt has also had negative effects on your score. Often, completing bankruptcy puts individuals on the path to improve their scores, and the following methods could help you rebuild your credit.
Another reason you may have tabled the idea of bankruptcy relates to the potential inability to obtain a loan in the future. Luckily, bankruptcy does not disqualify you as a candidate for future loans. Additionally, considering secured loans could help you rebuild your credit. With this type of loan, money you have on deposit acts as collateral for the desired loan. Another way secured loans work relates to having the money placed in a savings account and then turned over to you after you make the needed payments.
Secured credit card
A secured credit card works in a similar manner as a secured loan. In order to obtain a secured credit card, you make a deposit, and the credit limit allowed will likely match the amount of money you deposited. Using this type of card and making your payments could help improve your credit and potentially increase your eligibility for an unsecured card.
Co-signed loans or credit cards
If you feel uncertain about utilizing secured loans or credit cards, you may want to consider using a co-signed loan or card. With this option, a person with a good credit score can co-sign for your loan or your credit card, and his or her good credit can vouch for your loan. You can then make payments in order to improve your score. However, this option could put your co-signer at risk if you do not make the necessary payments.
Other options and avenues also exist for rebuilding credit after bankruptcy. Therefore, you may want to reconsider completely disregarding this option for addressing your considerable debt obligations. Information on the different bankruptcy routes could help you better understand how this relief method could potentially benefit your circumstances.