In 2016, 766,000 Americans filed for bankruptcy, and there are many reasons why a person could choose to do so. For instance, Kentucky residents could experience a job loss or a medical bill that they can’t afford to repay. Those who choose to file for bankruptcy should learn the difference between a Chapter 7 filing and a Chapter 13 filing. In a Chapter 7 case, debts could be discharged without paying much or anything to creditors.
Those who file for Chapter 13 bankruptcy will likely need to pay their debts over a period of three or five years. Although bankruptcy can have a significant impact on a person’s life, it is something that individuals can recover from. One way to do this is to open new credit accounts. It can also be worthwhile to work with a bank that has programs specifically designed to help people reestablish their credit.
Taking these steps shows creditors that a person is worth taking credit risks on again. It is worth noting that credit scores can actually go up after a person files for bankruptcy. Furthermore, it can also be possible to buy a home or otherwise get a loan within a year of filing for Chapter 13 protection.
By filing for Chapter 7 or Chapter 13 bankruptcy, it may be possible to have debts discharged or reorganized. This may make it easier for a person to regain control over his or her financial situation. While a bankruptcy case is open, creditors generally cannot contact a debtor by phone or mail. They also are generally barred from repossessing property or starting foreclosure proceedings. An attorney may be able to further explain the benefits of filing for bankruptcy protection from creditors.