When it comes to bankruptcy in Michigan, many look at the legal proceeding as a formal end to their financial stability and success. Bankruptcy can be viewed in a completely negative light, and the fear of experiencing such a stigma keeps many from exploring their bankruptcy options. However, a better way to approach bankruptcy is in the spirit of a new beginning.
There is no doubt that bankruptcy will take a toll on an individual's credit score. However, since many individuals wait to file for personal bankruptcy after years of financial struggle, their credit rating may already be damaged from late payments and high credit balances. In such cases, bankruptcy can stop the monthly late payment dings that can chip away at one's credit ranking. If you credit rating has not yet been tarnished by your debt load, then a bankruptcy won't hurt your credit score nearly as much.
Filing for bankruptcy does not necessarily preclude an individual from obtaining new credit lines. While it may be difficult to obtain a new loan within the first six months after a bankruptcy filing, consumers can and should take this time to start rebuilding their credit rating. One tip is to apply for a secured credit card and then use it responsibly, paying the bill on time each month and keeping the balance owed at a reasonable level.
Furthermore, a bank with whom a consumer has established a solid financial track record may be willing to issue you a personal loan, which can also help your credit score. Credit unions are another good resource for bad credit loans, and often offer lower interest rates to members. In addition, there are many reputable online lenders who may be willing to issue new credit to borrowers who have filed for bankruptcy in the past.
Above all, the key to successfully obtaining a loan following a Michigan bankruptcy is to aggressively attack credit repair. Many times, changes you make now will take many months to affect your credit rating, so it is important to begin the process early. When a consumer becomes overwhelmed with high levels of debt and simply cannot dig their way out, personal bankruptcy may be the most financially rewarding decision they can make.
Source: GoBankingRates.com, "How to Convince Lenders to Give You a Loan After Filing for Bankruptcy," Sept. 2, 2012