Filing for bankruptcy is a big step. One that will follow up around for seven to ten years, depending on the route that you take.
If you file for Chapter 7 , most of your unsecured debts are written off within 90 days of filing. The bankruptcy will stay on your credit report for 10 years. While debts will be forgiven, you’ll have to sell some of your property, with the proceeds distributed to your creditors. In most cases, this means you’ll lose your home (if you own it), as well as any expensive items such as art and jewelry, and pricey consumer electronics.
Chapter 13, on the other hand, is a repayment plan: You set up a three- or five-year schedule with your creditors. Chapter 13 bankruptcy remains on your credit report for seven years. With this type of bankruptcy, you get to keep all of your property, including your home.
You might be a candidate for Chapter 7 if you have no assets to lose, like a house or a car, and if after you pay for your basic monthly expenses you have no money left to pay off debts. Chapter 7 essentially wipes the slate clean, but you’d most likely lose any valuable possessions.