With the cost of everyday items like housing, gas and groceries increasing it can be difficult for Florida residents to make ends meet. Sometimes, despite their best efforts to pay their expenses on time and in full, they are unable to, through no fault of their own. Many individuals turn to credit cards to fill in the gaps.
Borrowers may be reluctant to file for bankruptcy because of the impact it may have on their credit score, but it may be necessary.
A credit score is used by employers, landlords, financial institutions and others to demonstrate how a borrower manages his or her payments. While filing for bankruptcy can cause a borrower’s credit score to drop, it does not stay on his or her credit report forever.
Generally, the bankruptcy will remain on an individual’s credit report for 7-10 years, depending on the type of filing. Some bankruptcy plans allow borrowers to repay what they owe over a period of time.
Initially, if an individual files for bankruptcy it may affect his or her ability to apply for and obtain new credit or may come with higher interest rates or stricter repayment terms. This is because the financial institution may see the borrower as a higher risk.
However, if the borrower makes payments on time and uses credit within the limits granted by the lender, this can help him or her rebuild credit over time.
There are several options available to individuals who are facing financial difficulties.