Filing for bankruptcy in Ohio may help an individual eliminate overwhelming debt, but his or her credit score might drop by 100 points or more due to the filing. This may make borrowing costlier and more difficult for several years. Fortunately, a couple of tools can help individuals who have filed for bankruptcy rebuild their credit: a credit builder loan and a secured credit card.
A credit builder loan requires a person to pay off a loan before receiving money back. This makes it different from a traditional loan, where a person receives funds upfront and repays it later. These loans may also be promoted as savings accounts.
Secured credit cards require security deposits, which limit the card issuers’ risk. Cardholders’ payment histories are reported to today’s credit bureaus, so making on-time, consistent payments may improve their scores over time. This can increase their credit opportunities long term.
How a bankruptcy attorney can help
Sometimes filing for bankruptcy is the best option for breaking free from the grip of extensive debt. An attorney in Ohio can evaluate a person’s financial situation and help him or her decide if bankruptcy is the right choice. A Chapter 13 bankruptcy in particular may help the individual stop a foreclosure proceeding and remove substantial amounts of unsecured debt. In addition, it might make nondischargeable debts like student loans and child support easier to manage. The bankruptcy process may ultimately give a person struggling with debt more financial peace and security in the years ahead.