When debt becomes overwhelming and is leading to financial hardship, it might be time to consider filing for bankruptcy. It can remove some or all of your financial obligations or restructure debt in a way that is more manageable. But bankruptcy will also ruin your credit score and make it difficult to borrow money for several years. Bankruptcies can take seven to ten years to come off your credit report depending on which type you file for, but their impact on your credit score does fade over time. The following article provides common information regarding filing for bankruptcy and does not serve as an alternative for speaking to a certified legal consultant.

What happens to my property?

When you file for Chapter 7 bankruptcy you will likely need to sell of some of your assets to satisfy at least some of what you owe to creditors. State laws determine which assets are exempt from liquidation. This can be everything from retirement accounts to your home and car. You will need to check with a bankruptcy attorney in your state to determine which assets you will be allowed to keep.

What happens to my credit?

Filing for Chapter 7 bankruptcy lets lenders know that you aren’t paying your debts. This makes you seem riskier in the eyes of lenders and credit card companies. Filing for bankruptcy will seriously damage your credit score. A Chapter 7 bankruptcy will remain on your credit report for up to 10 years. Once your bankruptcy is discharged by the court, it will be hard to get approved for credit, and the credit that will be available will come at a higher cost in terms of interest rates.

You can rebuild your credit over time. As you make timely payments and show that you can borrow responsibly, your credit score will begin to recover.

Will bankruptcy impact my ability to get a job?

Some employers, about 29%, run a credit check on new job applicants, according to CareerBuilder. If you declare bankruptcy, it could affect your ability to find employment in the future, if that employer runs credit checks. This is more common in the financial services industry and government jobs.

If you are considering bankruptcy, we can help. Get legal advice today by completing our online form.