The duration of unemployment benefits is limited, and they do not cover all expenses that may arise during unemployment. For many, reducing spending and living within a budget while relying on any savings was insufficient to cover all of their expenditures, necessitating the need to take out loans and incur additional debt. Many of these individuals were eventually forced to declare bankruptcy.
There were over 1,300,000 personal bankruptcy filings in 2011. Two-thirds of these applicants had lost their jobs over the past year. For many, the only alternative to losing everything to the bank and creditors was filing for bankruptcy.
The Consequences of Filing for Bankruptcy
Despite the fact that bankruptcy can alleviate a debtor's financial burdens, it has significant and often long-lasting effects on a person's credit history. Even after paying off the remaining debt, the individual's credit score will remain low. To reestablish credit, the individual must make purchases and timely payments on their debt.
Due to their prior bankruptcy filing, these individuals will frequently find that banks, creditors, and merchants are unwilling to extend credit of any significant value. As a result, individuals attempting to reestablish credit must begin slowly and work their way up to higher credit levels.
Prior to filing for bankruptcy, it is strongly advised that individuals consult with a bankruptcy attorney to discuss alternatives to bankruptcy. They can also receive guidance on spending habits and debt consolidation options to facilitate debt repayment.
Reconstructing a Good Credit Rating
This is frequently accomplished with secured credit cards, in which a person provides a bank a set amount of money that they can spend and must eventually repay. The bank then documents these transactions and transmits the data to the three credit unions. As an individual maintains a low balance on this card and makes timely payments, banks may be willing to renegotiate the individual's available credit limit. A person desires a high credit score with a low balance, which demonstrates that they can be relied upon to repay their debts.
Eventually, a person can work with a bank or business to establish unsecured credit cards or business credit cards with lines of credit. Even when a person's credit score improves, it is imperative that they continue to monitor their spending patterns and budget accordingly. When a person finds new employment, even if it is temporary or if they are underemployed, they can work with financial advisors or credit counselors to determine the most effective methods to pay off any remaining debt and remain debt-free. The path to credit recovery may be lengthy, but it is well worth the effort.""
" - https://www.affordablecebu.com/