There are many things to consider when it comes to implementing debt relief options. While many individuals in New Hampshire and elsewhere fear the bankruptcy process, the reality is that it has the ability to provide debtors with a fresh financial start. Nonetheless, life during and after the bankruptcy process can be impactful. Thus, it is important to consider the costs and benefits of this process.

Will filing for bankruptcy damage my credit score? This is a question that causes many to reconsider whether they will file for bankruptcy. However, it is not a simple yes or no answer. Although the filing itself could remain on a credit score for up to a decade, the effects it has will diminish over time until it is completely dropped from a credit report. How a bankruptcy filing impacts a person’s credit report is dependent on the type of bankruptcy filed.

For example, Chapter 7 bankruptcy, which is used to forgive most debts such as credit card debt, medical bills and personal loans, will cause a negative mark on a credit report for 10 years from the date of filing. A filing could cause a credit score to drop as much as 200 point or more. Additionally, any debts that are erased through a Chapter 7 filing will be included in a credit report.

In contrast, a Chapter 13 filing will remain on a credit report for seven years. But much like a Chapter 7 filing, it will significantly impact one’s credit score. This type of bankruptcy filing creates a repayment plan that allows the debtor to repay certain debts in a five-year span while also maintaining certain assets, such as vehicles, jewelry, home and other property.

Whether due to poor spending habits, financial hardships caused by a job loss or medical bills, or some combination of the two, dealing with debt is oftentimes an emotional and overwhelming experience. Finding ways to reduce the impact debt has on one’s life is important, and filing for bankruptcy may be the answer. Thus, it is imperative to take the time to understand this process, seeking guidance when necessary.