When people in Tennessee are struggling with insurmountable debt, they may consider personal bankruptcy as an option to find relief and escape from a crushing financial situation. However, they may also be concerned about the impact of bankruptcy on their credit and ability to borrow in the future. While 700,000 Americans filed for bankruptcy in 2017, there can be serious impacts, including a reduction in one’s credit score.

In many cases, the practical costs of a lowered credit score after declaring personal bankruptcy may be less than people anticipate. For example, if people borrow a $15,000 loan for a car one year after their bankruptcy, they’ll wind up paying around $2,100 more over the course of the loan on average than someone without a bankruptcy. But by waiting two years after the bankruptcy filing, the cost decreases dramatically to approximately $800 over the five-year loan period.

It should be noted that many people who file for Chapter 7 bankruptcy do so because they already are dealing with late payments, collection calls and other credit issues, so the difference can often be less substantial. Whether dealing with a mortgage, a personal loan or other types of lending, the “costs” of bankruptcy can drop dramatically as time increases after the filing. In as little as three to five years after bankruptcy, the price that people will pay for loans on average are similar to those who have never filed.

People who are filing for Chapter 7 bankruptcy can work to rebuild their credit and reduce the impact of the filing on their lives while obtaining much-needed debt relief. A bankruptcy lawyer may work with people struggling with debt and help them move through the process to obtain a new financial future.