Declaring personal bankruptcy is one of the top stresses a family or individual can face. It is avoided at all costs and only considered as a means of last resort. In this troubled economy massive lay-offs have pushed many to financial ruin and so there has been a dramatic increase in personal bankruptcies.

Short-Term Relief

Once a bankruptcy attorney is hired bill collectors by law must stop calling you requesting payment. Each collector must be informed of the impending bankruptcy and provided with the name of the attorney. Once this information is verified the constant phone calls will end. While this brings immediate relief there are still long-term implications that will persist.

A Part of Your History

Personal bankruptcy will stay on a credit report for ten years. Even though bad credit can be re-built, the bankruptcy will remain part of your credit history. Depending on what type of debt was owed, it could take some time to rebuild bad credit.

Big Purchases

Bankruptcy attorneys inform their clients about the inability to make big purchases such as a house. New Jersey for example, is a state in which it usually takes two years to rebuild a credit history to the point that will qualify a home-buyer to purchase a house.

The ability to rebuild personal credit is a slow process that usually begins with securing a credit card. If you do not qualify for a regular credit card, it is advised that a secured credit card be attained. As you prove your financial worthiness, it will become easier to receive a regular credit card. A credit score will slowly raise if the credit card is used wisely and the amount due is paid off in full. Carrying a small balance is tolerable and will not adversely affect your overall credit score, if it stays below a certain percentage of your credit limit.

Receive Annual Credit Reports

Since the credit history of anyone who files personal bankruptcy will be adversely affected, receiving annual credit reports will be beneficial. All three companies will provide a history once requested. For a fee, the credit score itself can also be obtained. Working to reach the “good” credit score grouping is most important.

Personal bankruptcy can be claimed every eight years, but once is usually more than enough for most people. It will take at least two years to rebuild your credit, but with determination it can be achieved.