For most people, individual bankruptcies provided by the courts fall into two categories. The first is chapter 7 and the second is chapter 13. Out of these two bankruptcy options for individuals, the most common is chapter 7.
Low Income Bankruptcy
Chapter 7 bankruptcy is typically relegated to people of lower income brackets. While people of all financial situations of life may have to file for bankruptcy, it’s not surprising that lower income earners, those that file chapter 7, make up the vast majority of those filing for bankruptcy. Regardless of the reasons, a person may wonder what chapter 7 bankruptcy is all about.
Wiping the Slate Clean
Chapter 7 bankruptcy is a type of bankruptcy where most of an individual’s debt, minus tax debt or mortgage debt, is forgiven. With the power of the judicial system, a person’s existing debt is wiped out and, as far as it concerns credit, the slate is wiped clean.
Negative Repercussions
While this may sound good – and it usually is – there are repercussions to both a chapter 7/13 bankruptcy in Lithonia. The repercussions may be a bit less for chapter 13 because rather than forgiving excessive amounts of debt, chapter 13 is a repayment plan. However, there are still repercussions.
Damaging to a Credit Score
Most people that file for bankruptcy, chapter 7 or chapter 13, will find that their credit scores will take a significant hit. It will also be difficult to find lenders that are willing, at least initially, to extend credit offers. This may get better over time, but it could take a few years.
7 Years
In addition, the bankruptcy, whether it was chapter 7/13 bankruptcy in Lithonia , will reside on a person’s credit score for up to seven years. This can make it challenging for an individual to borrow excessive amounts of money for a car loan or mortgage unless they have a significant amount of money upfront.
The repercussions of bankruptcy aside, there are situations where people will have to accept the negative impacts of bankruptcy in order to see their way clear of a difficult financial situation. That is precisely what bankruptcy was devised to do and it is exactly why so many people meet with the bankruptcy attorneys at website to figure out a plan moving forward.
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