Bankruptcy

Bankruptcy is a legal declaration of the inability to repay debts. Bankruptcy should be viewed as a last resort. It will have a severe impact on a credit rating and will remain on a credit report for ten years. Furthermore, bankruptcy is not a solution in all cases. Federal student loans, Federal tax debt and child support are all exempt from bankruptcy protection. Bankruptcy agreements vary but there are two types of agreements that most people choose: Chapter 7 and Chapter 13. In Chapter 7, all unsecured debts are liquidated; in chapter 13, there is a reorganization where the filer will pay back a portion of his or her debts to the applicable creditors.

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