Sunshine #662302

Nobody likes the idea of declaring bankruptcy, but sometimes it’s the only option. And if you ever have to file, you’ll need to take steps to minimize its long-term impact. After all, bankruptcy stays on your credit report for up to a decade. During this time, it may be more difficult to:

• Buy a home
• Rent an apartment
• Get credit cards
• Land a new job
• Take out a loan
• Get other kinds of credit

But if your bankruptcy occurs for a medical reason, it may be possible to lessen the damage. This type of bankruptcy is not perceived as negatively as some other kinds. You may be able to find creditors who are willing to work with you. But you’ll need to make a good faith effort to demonstrate financial responsibility.

Review your credit report. Your credit score is based on factors more than just your bankruptcy. So if possible, you want your bankruptcy to be the only blot on your record. But an error on your report can send your credit rating even lower. If you work closely with the various reporting companies, they will remove anything that is inaccurate. This may boost your credit score.

You can also write a brief statement explaining the cause of your bankruptcy. Send it to the credit bureaus to attach to your report. Potential lenders will see that your bankruptcy was brought on by illness.

Save all your medical bills. Someone may be willing to work with you if you can prove you were bankrupted by illness. Keeping a file of medical bills will help you back up your claim. You might also want to document the illness itself. But don’t feel compelled to disclose anything you’d rather not.

Pay all your bills on time. This will help you re-establish credit. When lenders examine your report, they will see you are keeping up with payments. This may influence their decision to work with you. Missing your payments, though, will only drag down an already damaged credit rating. If you run into trouble paying your bills, be honest. Work with your creditors so they don’t report you for missed payments.

Get some professional help. It’s a good idea to consult with a doctor and explain your situation. He or she can help you devise additional strategies based on your situation. If you’re having trouble paying some of your bills on time, seek out a credit counselor. Credit counselors often work with creditors to restructure payments and extra time. They also know how to fix the errors that may be lurking in your credit report.

Honesty is the best policy. There’s no point in trying to hide your bankruptcy from potential lenders and employers. They’re going to find out anyway. And when they do, your chances of getting that job or taking out that loan will be slim. Instead, be up front about it. Explain that it was a medical bankruptcy and that you simply couldn’t afford the bills. Also explain that you are taking the steps needed to repair your credit, and that you are making every effort to be financially responsible.

Give it time. The old adage that time heals all wounds turns out to be true for your credit report as well. The older you bankruptcy is, the less damage it does to your score. And depending on the circumstances, it will be completely erased in either seven or 10 years. In the meantime, concentrate on getting back to health and getting your finances in order. If you can do those two things, your bankruptcy won’t be able to control you. It will be gone from your record before you know it. And once it’s gone, it’s gone for good.