Through a Chapter 7 bankruptcy case, you may eliminate most unsecured debt such as medical bills and credit cards.
You may also surrender real estate or vehicles that you have financed if you don’t want to keep those debts.
(To learn whether your employer can fire you because of your bankruptcy, see Post-Bankruptcy Discrimination: Is It Legal?
) Bankruptcy records are available at the federal bankruptcy courthouse where they are filed and through the federal court system’s subscription-only PACER service.
(To learn more about which debts can be discharged, read Which Debts Are Discharged in Chapter 7 Bankruptcy?
) Through a Chapter 13 bankruptcy case, you repay a portion of your unsecured debts through the court-supervised repayment plan. Depending on the type of bankruptcy case you file, the filing may stay on your credit report for seven to ten years.
(To learn more about the types of debt consolidation, visit Nolo’s Debt Consolidation topic area.) Here are some of the advantages of using debt consolidation to better manage your debt. Unlike bankruptcy, debt consolidation is not a matter of public record.
Anyone who looks hard enough will find out about your bankruptcy.
Bankruptcy records are viewable through an electronic subscription service called PACER or at any federal bankruptcy courthouse.
Although a debt consolidation loan may show up on your credit report, it does not typically lower a credit score like a bankruptcy filing does. Unless prohibited by the debt consolidation agreement, you can keep your credit cards. However, if you already owe a significant amount of money or are in default, you may not be able to use your credit cards or be approved for additional credit. If you consolidate your debts, you may be able to obtain a more manageable monthly payment, with a lower interest rate.
Through bankruptcy, you may eliminate or restructure certain debts while under the protection of the federal bankruptcy court.
The most common types of bankruptcy cases that individuals and small businesses file are Chapter 7 and Chapter 13.
A Chapter 7 bankruptcy case allows you to eliminate many types of debt.