Bankruptcy is a legal process designed to help residents of Tennessee and Arkansas regain financial control by eliminating all or part of their dischargeable debt. Filing bankruptcy has some immediate short-term impacts and long-term effects as well. It’s a challenging decision but often the best option for the financially overwhelmed.
Some short-term consumer bankruptcy costs include an immediate and steep drop in your credit score. Filing for bankruptcy lowers your credit score significantly, making it difficult to obtain credit or loans. Moreover, bankruptcy isn’t free: Court costs and legal fees can run into thousands of dollars.
You might need to sell some assets to pay off creditors before your bankruptcy is approved. However, some property is exempt from liquidation and you may be able to keep your primary home and car.
A severe long-term bankruptcy cost is a negative impact on your credit history. Chapter 7 Bankruptcy can remain on your credit report for up to ten years, and Chapter 13 can stay for up to seven years.
Bankruptcy puts you at a higher risk for new lenders and insurers. Some employers consider bankruptcy a risk factor when hiring for specific job categories or considering promotions.
Bankruptcy provides relief from the stress of overwhelming debt. It relieves the burden of collection calls and emails and fighting with your significant other over money. It’s a good idea to weigh the long and short-term costs of filing for bankruptcy. Preparing for life after bankruptcy is challenging but achievable.