About Consumer Bankruptcy
Consumer bankruptcy, also known as Chapter 7 or Chapter 13, is a legal process that allows individuals and businesses to restructure their debts. It provides relief from creditor harassment, debt collection activities, and wage garnishment.
- Overwhelming debt: Accumulated credit card balances, medical bills, car loans, and other debts can become overwhelming, making it difficult to pay them off.
- Financial difficulties: Unexpected expenses, job loss, or reduced income can lead to financial stress, causing individuals to file for bankruptcy.
- Creditor harassment: Frequent phone calls, letters, and visits from creditors can be stressful and harassing. Bankruptcy provides a temporary reprieve from these unwanted interactions.
- Wage garnishment: Creditors may garnish wages to collect debts, causing financial hardship for individuals and families.
Bankruptcy can significantly affect credit scores. Filing for bankruptcy within 10 years of discharge is considered a "hard credit score event," which can lower your credit score by up to 200 points.
