Making the decision to file for bankruptcy can be a difficult one. At times, it might even feel overwhelming and uncertain. Is filing for bankruptcy the right move to make for your situation?
What will happen once you file? What does declaring bankruptcy do?
You’re most likely asking these questions plus many more. Although declaring bankruptcy could be daunting to think about, many individuals are able to file for it and recover. Here’s everything you need to know should you declare bankruptcy.
Continue reading to find out more!
1. It’ll Become Part of Public Record
It’s important to keep in mind that once you declare bankruptcy, it’s a public record. Creditors and attorneys alike often look up public records to determine if someone has filed for bankruptcy. Because it’s a public record, anyone else can access this information as well.
Bankruptcy will also appear on your credit report. Landlords and employers will often require a credit check. The check will then reveal you’ve filed for bankruptcy, which may or may not affect your relationship with them.
2. It’ll Affect Your Credit
The only reason you’d consider filing for bankruptcy is that you’re behind on payments and have landed in debt. Being in debt has a direct link to your credit. The actual action of filing for bankruptcy will also impact your credit score.
This will stay on your credit for either 7 or 10 years depending on what type of bankruptcy you file for. Chapter 7 bankruptcy will stay on your credit report for 10 years while chapter 13 bankruptcy will stay on your credit for 7 years.
Understand that once you file for any type of bankruptcy, it’ll be much more difficult to get approved for credit and lenders will require a higher interest rate.
3. It’ll Clear MOST Debt
Filing for bankruptcy can clear most of your debt, but there are some debts that it won’t clear. It’s important to include all debts you want to be cleared in your petition when filing for bankruptcy. Anything you leave out of the petition won’t be cleared.
There are a few other debts that can’t be cleared throughout declaring bankruptcy either and are as followed:
- Alimony and child support payments
- Student loans
- Fines and penalties for criminal charges
- The majority of taxes
These are just a few debts that aren’t cleared with bankruptcy. Be sure the type of debt you have can be cleared after filing. It’s also a good idea to consider an Individual Voluntary Arrangement (IVA) before choosing to file.
You can learn more about (IVAs) at becomedebtfree.co.uk.
Wondering What Does Declaring Bankruptcy Do?
If you’re wondering what does declaring bankruptcy do, then we hope this guide was able to help. Use the information listed here to determine if filing for bankruptcy is the right move for you or not. Remember to consider all of your options and only choose bankruptcy if there are no other options for your situation.
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