Filing for bankruptcy is not a decision that those in Mississippi or anywhere else in the country can take lightly. While many debts could be eliminated in a Chapter 7 filing, it could also result in a person’s credit score dropping by about 200 points. This may make it harder to borrow money, and lenders who are willing to work with a person after bankruptcy will likely charge high interest rates.
Chapter 7 bankruptcy is ideal for those who either don’t have a lot of money or don’t have any income at all. A trustee will be appointed to liquidate a debtor’s non-exempt assets and use the money raised to repay creditors. If a debtor also has secured debts like a home or car payment, he or she could choose to continue making those payments in a Chapter 7 filing.
As a general rule, this type of bankruptcy will stay on a credit report for up to 10 years. However, individuals are urged to continue making payments on their remaining debts to show that they can be trusted with debt again. Those who don’t have a job are encouraged to find employment as having an income generally makes it easier to save money or pay existing debts.
A person who has overwhelming debt might benefit from filing for Chapter 7 bankruptcy in a variety of ways. For instance, he or she may get a stay from creditor contact or collection activities such as a lawsuit. Bankruptcy might also result in debt balances being reduced or eliminated in a short period of time, allowing debtors to better manage their finances. An attorney may be able to describe other benefits of bankruptcy or whether it is in a person’s best interest to file for such protection.