What I Need to Know About Going Bankrupt
You may consider filing for bankruptcy if you have accumulated more debt than you can handle or repay within a reasonable time. When you go bankrupt, you enter into an agreement with the court to repay at least a portion of your debt over a period of years.
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Types
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Two common types of bankruptcy for individuals in the United States are Chapter 7 and Chapter 13. Under a Chapter 7 bankruptcy, you may have to sell your property to pay your debts. You can file for Chapter 13 bankruptcy if you have a current source of income. Under Chapter 13, you come up with a payment plan to repay all or some of your debt over a period of years.
Consequences
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A bankruptcy stays on your credit report for up to 10 years. It affects your ability to get loans, including a mortgage. In some cases, filing for bankruptcy prevents you from getting a job, especially a job that requires you to be bonded or to need clearances, according to the state of Michigan.
Limitations
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If you have student loans, owe child support or have tax debt, filing for bankruptcy will not wipe out those debts. You will have to pay them as part of your Chapter 13 repayment plan or after liquidating during a Chapter 7 bankruptcy.
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