Bankruptcy is a legal remedy that is available to individuals who have qualified debt that exceeds their assets. A person may seek relief from the courts in the form of a complete discharge of their debt – Chapter 7. They may also enter into a court-supervised repayment plan – Chapter 11. Bankruptcy laws were designed to give people a second chance at managing their financial life. There is no such thing as Debtor’s Prison, but there can be serious consequences when you are unable to repay your debt. Bankruptcy can stay on your record for 10 years and make it very difficult for you to get credit in the future. Your credit score will suffer, and it may affect your ability to qualify for a mortgage and buy a home. If you can find a mortgage, the terms are usually quite unfavorable and may come with a high interest rate and upfront fees.
