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Posted in Bankruptcy
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hollielynne2011

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bankruptcy what is it?? how will it affect or do to my credit score and in general
I don't understand any of this

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Bankruptcy is a legal process where you are basically saying you do not have the money to pay your debts and you are seeking relief from the debt.  In a Chapter 7, you are trying to cancel all debt obligation, though there are some debts that cannot be discharged in bankruptcy (child support, student loans, taxes).  In a Chapter 13 (also known as Wage Earner's Repayment Plan) you are declaring that you cannot pay all debts as agreed, but you'd like to pay something on the debts.  Again, there are some debts that cannot be discharged.  But the interest rate you would be paying is much lower, certain tangible items such as cars are recalculated at the "book value" instead of what you owe on it.  In this case, you will be making regular monthly payments to a court-appointed trustee who distributes the money to the creditors for 3-5 years, depending on the court decisioin.  The public notice of a Chapter 7 is 10 years and a Chapter 13 generally is off your credit report 7 years after it is completed.  Filing bankruptcy should be considered the ultimate last-ditch option since doing so violates a trust (the credit you were granted and agreed to repay) and results in difficulty in obtaining credit in the future. .  

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