Filing for bankruptcy can destroy your credit score

Filing for bankruptcy can destroy your credit scoreWhen major institutions went bankrupt at the beginning of the recession, they received billions of dollars in a government bailout. Personal bankruptcy, however, isn't quite as simple. Those with a bad credit history will make matters even worse by declaring this dismal financial state.

Filing for bankruptcy is the legal process of getting your debt forgiven by lenders. While that sounds like a great idea, it leaves a severe mark on your credit report and does years worth of damage to your score. This move can stay on your record for seven to 10 years, meaning you will be seriously hurting your chances at receiving any future home, education or car loans. It is important to do all that you can to repay your debt, even if it involves asking loved ones for a personal loan, which may be a better option, as they don't come with interest.

Borrowers also have the option of contacting the National Foundation for Credit Counseling, which can set consumers up with a feasible repayment plan, or even their own credit card company, which may be able to enroll them in a special program for people with bad credit.

However, if you feel there is no other option, those who file for bankruptcy may be able to apply for a bad credit auto loan if necessary.