What happens when you file bankruptcy?
Chapter 7 bankruptcy for example, is one of the most common forms of bankruptcy that individuals may file for.
In a chapter 7 bankruptcy, your assets are liquidated in order to pay off as much of your debt obligations as possible. The cash from your assets are re-distributed to creditors including any banks, credit cards or other creditors that you may owe money to. Overall, it offers the option for a fresh new start.
Once you file for a chapter 7 bankruptcy however, the notation remains on your credit report for ten years. This can place major limitations on a person in various areas such as reducing a person’s purchasing power, limiting ones ability to apply for a credit card and even jeopardizing a person’s ability to obtain employment within certain industries.
It is important to do your research to find out all the options that are available to you before deciding if you need to file for bankruptcy, what kind of bankruptcy you should file for and what it will mean for you long-term.
Author: Shurnette Henry, Managing Partner, Papillon Financial