Have you been thinking about filing bankruptcy? Are you curious about what will happen if you go forward with your thought to liquidate a large portion of your debts? If so, here are some answers.
Effects to Your Credit Report
If you file bankruptcy, it will show up on your credit. A chapter 13 bankruptcy will stay on your record for seven years. A chapter seven bankruptcy will stay on your record for 10 years.
Credit Cards Closed
Any credit card that you have when you file will be closed. Therefore, if you still want a credit card, you will have to reapply for one once your bankruptcy is discharged.
Your credit score will drop tremendously (if it was high). Also, it will take some consistent credit building moves to pull it back up.
If you do not own a home when you file, you will have to wait three years after your bankruptcy's discharge date. Therefore, buy a house before filing or make plans in your budget to rent or move in with your parents.
Any possession that you put up as collateral for a loan can be taken from you after filing bankruptcy. In order to close the case on your liquidation, you will have a meeting of the creditors day in court. If the creditors show up that day, they may ask for the items that you put up for collateral to pay off the loans.
Left Over Debt
There is a possibility that you will still have debts to pay after filing. Your student loan debt is an example of a credit that cannot be liquidated through bankruptcy.
Last but not the least, your bankruptcy will be a part of your public record. A chapter seven bankruptcy can remain on your public record for 20 years.