If you are like most Iowa residents burdened by unmanageable debt, you have probably taken your struggle as an opportunity to plan your future. Whichever debt management strategy you choose might have a significant impact on your credit going forward. For example, bankruptcy carries a relatively lasting repercussion: Credit reporting companies may report bankruptcy data for ten years after your bankruptcy becomes official.

This ten-year duration begs the question of why you would want to declare bankruptcy in the first place. The answer to this common question might be divided into two parts.

First, bankruptcy remains a viable option because it does not preclude you from receiving loans. As explained by the Federal Trade Commission, a credit report score is simply a representation of your outlying debts and your available credit. Individual entities, such as banks or prospective employers are free to use information from your report in any way they choose. Common examples include:

  • Determining your credit card terms during the application process
  • Approving you for a loan
  • Deciding whether to accept you for a job opportunity

Damaged credit might factor into a decision, but it is typically not the only factor. Furthermore, bankruptcy is merely one aspect of these complicated reports.

The second part of the answer is that bankruptcy might prevent you from damaging your credit further. The FTC notes that certain types of loans might adversely affect your credit score, such as those issued by financing companies. It might require some serious calculations, but it could be worth it for you to establish and then compare long-term timetables for your debt management strategies. This process could be instrumental in determining which route helps you heal your credit more expeditiously. Please do not consider this article as legal advice— it is simply an introduction to the subject.