Chapter 7 - Personal Bankruptcy

Personal bankruptcy is the act of filing a petition with the courts to seek protection from your creditors. It happens when a person’s debts exceed both income and assets. At the end of chapter 7 bankruptcy either some or all of the debts are discharged.

What most people do not realize is that in order to file chapter 7 the must be a federal court proceeding. What an individual owes out of obligation gets weighed against the rights of his or her creditors. While the individual involved hopes to reduce or eliminate all debts, the creditors objective is to collect as much of that debt as possible. In the federal court proceeding the judge ultimately decides on what the individual is to pay back and what the arrangements are in regards to the creditors involved.

Debt, Bankruptcy, and My Credit Score

By filing Chapter 7 or Chapter 13 Bankruptcy you are basically telling the financial world that you are broke, unable to pay your bills, and defaulted. Without much more to explain, bankruptcy will have a severely negative impact on your credit score.

Unfortunately, only the credit bureaus truly can know how much your score may drop once you file bankruptcy. If you have perfect credit right now, which is highly unlikely if you have a lot of debt, your score will move from excellent to poor immediately. Credit scores of those who have filed reveal that bankruptcy stays with you for 10 years which makes filing so difficult for so many.

More Information on Bankruptcy

Filing Chapter 13 Bankruptcy

Filing Chapter 7 Bankruptcy

Filing Chapter 11 Bankruptcy