what is bankruptcy, how does it work, how does it affect your credit, and what does it do?
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there is a bit more nuance ot this due to location and local law but Declaring Bankruptcy is effectively saying:
“i no longer have the capacity to service this debt and i wish ot defer this process to a legal authority that can assist me ni sorting this out.”
in the US at least you got 2 types of declaration for the invidiual:
– chapter 7: which in a super simplied sense just reads “liquidate whatever non essential assets you still have(meaning you cant be made homeless of put in a position where you cannot work)” and pay off the debtors whatever this result in. thwey will likely not get ALL Of their money back, but theyll get some.
– Chapter 11: this one is essentially asking the authority to assist you in restructuring your debt and work out a financial plan that lets you still function but also pay off your debt over time: this often means youll have your ages/profits garnished until all is payed off.
in both cases this declaration will og in your record which will impact your ability ot get further loans for a number of years/until its settled. but ib both cases once the plan is in motion all debt that can be discharged, will be and your current debtors will be prohibited b ythe courts from continuing ot hassle you for this specific debt.
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