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Chapter 7 bankruptcy does not mean financial ruin

It is a widely held belief that filing for bankruptcy could mean the end of future credit and financial security. However, this is not the case. Kentucky residents who choose to file for Chapter 7 bankruptcy are not necessarily in danger of jeopardizing their future finances by erasing their current untenable debt. 

A bankruptcy filing remains on an individual's credit report for seven years, but it is possible to recover from the credit hit far sooner than that. After a bankruptcy, a credit score will necessarily suffer, but depending on the length of time between the filing and -- for example -- applying for a loan, the amount of money it will cost can lower drastically. An auto loan that costs $15,000 may cost up to $2,000 in interest if applied for after a year of bankruptcy, but after two years, the amount could drop to as low as $800. 

Applying for a mortgage is a similar scenario. A mortgage applied for after a bankruptcy filed three years ago results in an interest rate that is approximately 0.2 percent higher than an individual applying with no bankruptcy on record. Of course, handling a bankruptcy is best approached with the help of a professional. 

Chapter 7 bankruptcy can seem a difficult, challenging step for a Kentucky resident. However, it is important to remember that it is but one step in a larger process of moving toward financial stability. In filing for bankruptcy, an individual or company can consolidate and handle debts and remove the specter of looming debt from the fiscal future. 

Source:, "Bankruptcy makes loans more expensive, but not impossible", Mark Huffman, March 27, 2018

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