Illinois consumers who file for bankruptcy should understand the process before they do so, and this includes understanding certain myths about how it affects credit. For example, some people may have heard that having negative information on a credit report will bring down their score more compared to people who have no negative information on the credit report, but the lack or presence of either positive or negative information does not affect the severity of the hit a person's credit takes. However, the amount of debt and the number of accounts involved may.
Not every detail about a bankruptcy remains on a credit report for 10 years. In fact, only the Chapter 7 public record does, but other items, including a Chapter 13 bankruptcy, fall away after seven years. Furthermore, a person can rebuild good credit while this information is still on the report. After filing for bankruptcy, people can get loans and credit cards that will help in this rebuilding.
Bankruptcy does have a serious effect on credit. However, it can be a last resort that can help people get a new financial start. People should be aware that there are some types of debts, such as student loans and income taxes, that usually cannot be discharged in a bankruptcy.
It is better to tackle debt sooner rather than later since it can quickly become unmanageable. An attorney might be able to explain to a person what the options are for debt relief. The attorney can also look into whether the person is eligible for Chapter 7 or Chapter 13 bankruptcy. There are a number of advantages to filing for personal bankruptcy. One of the main ones is that filing puts an immediate stop to all creditor actions including foreclosures and legal action.