- While bankruptcy helps resolve financial problems, sometimes people don't pay enough attention to the potential long-term effects of bankruptcy, notes Bankrate. In the United States, most consumers seeking bankruptcy help file either Chapter 7 or Chapter 13, according to the book "How to File for Chapter 7 Bankruptcy." Each type of debt relief offers its own set of benefits, but both also include some potentially frustrating long-term effects.
- Your local bankruptcy court will automatically issue reports of your filing to the consumer credit bureaus, notes the credit reporting agency Experian. Chapter 7 cases are noted on your credit reports for 10 years from the date of filing, while Chapter 13 cases are reported for seven years.
This "black mark" can potentially impact your ability to get new credit, rent a house or apartment and may also preclude you from some types of jobs, warns both Bankrate and the book "How to File for Chapter 7 Bankruptcy." - Everyone who is interested can permanently access the information that you once filed bankruptcy, warns the book "How to File for Chapter 7 Bankruptcy." All cases are permanent public records accessible upon request online or in-person at nominal copying fees. Some newspapers publish lists of community members who filed bankruptcy. Also, some publications may choose to publish articles about a past bankruptcy filing even years later; these articles are usually only written about prominent community members such as politicians, business owners, doctors and lawyers.
- The loss of assets that sometimes accompanies bankruptcy could potentially impact your life, warns both Bankrate and the book "How to File for Chapter 7 Bankruptcy." In some cases, houses and vehicles are seized to offset creditor losses, especially in Chapter 7. How much property you can and cannot keep, particularly when it comes to real estate, personal injury settlements and bank accounts really depends on your financial situation and your state of residence. Fortunately, federal bankruptcy code protects your retirement accounts and basic personal property such as clothes and household goods.
- Some people file bankruptcy because of debts resulting from issues such as compulsive shopping, notes the Consumer Credit Counseling Services of St. Louis, Mo. If an underlying issue is not treated, the emotional effects can escalate even after bankruptcy. Also, sometimes even people who filed bankruptcy due to unavoidable circumstances such as job loss or an illness feel ashamed about the situation even years later, notes the book "How to File for Chapter 7 Bankruptcy."
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