What Are the Risks of Bankruptcy?
A bankruptcy can have a lasting impact on many areas of a person's life. Individuals must carefully consider all the alternatives, risks and affects of a bankruptcy before filing.
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Assets
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Filing for Chapter 7 bankruptcy, or liquidation, may result in the selling and distributing of significant portions of your assets and property to creditors to pay for your debts.
Credit
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Most people find that after a bankruptcy, they can't easily obtain credit, and any lines of credit they do receive have significantly higher interest rates or unfavorable terms.
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Housing
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Individuals who have a bankruptcy on their credit record may have trouble getting home loans or are subject to an increase in security deposits on rental properties.
Employment
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Though the practice is regulated in some areas, employers often run credit checks on potential employees, and a bankruptcy may affect hiring decisions.
Time Frame
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A bankruptcy appears on your credit report for 10 years after filing. You can only remove a bankruptcy from your credit report before this time if the information is inaccurate.
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