Credit Card Debt Info

If you’re considering bankruptcy then you should know all of the effects of this life changing decision.

The financial effects of bankruptcy:

Bankruptcy stays on your credit report for 7-10 years. This period is based on what bankruptcy option you choose.

Chapter 7 bankruptcy:
Will stay on your record for 10 years.

Chapter 13 bankruptcy:
Will stay on your record for 7 years.

People who choose Chapter 7 bankruptcy do not have to pay creditors and most debts are discharged. But there are some exceptions. The following debts cannot be discharged so you will still have to pay these debts under chapter 7 bankruptcy.

• Alimony and child support payments.
• Debts caused from a criminal act such as fraud, reckless driving, and criminal negligence.
• Debts caused by malicious injury to another person or their property.
• Credit cards, personal loans, and installment purchases made within 40 days of filing for chapter 7 bankruptcy.
• Student Loans.

People who choose chapter 13 bankruptcy will go through a repayment plan that is approved by a bankruptcy court. With this option you will have to make a monthly payment but you will be allowed to keep your assets such as a house or car.

To file Chapter 13 you must have less then $250K in unsecured debt and less then $750K in secured debt.

Other effects of bankruptcy:

Aside from the financial effects of declaring bankruptcy there are other negative effects that many people don’t consider. When a person files for bankruptcy they initially have a good feeling that they are getting their finances back on track. But soon after they may feel like a failer, which causes them to have emotional stress. They regret filing for bankruptcy a couple months after then have done this and begin to resent the people who suggested they file for bankruptcy.