Sometimes, our guests think that when they file Chapter 7 Bankruptcy, their debt gets paid by the government or some insurance policy. While some creditors may have their debt insured, there is no national bankruptcy insurance that pays creditors for any loss they may sustain. In the vast majority of cases, debts listed in bankruptcy get wiped out or written off, tax-free, forever. Now, the creditor is still allowed to write the debt off as a loss on their taxes, but no one actually pays the debt.
So, debts listed in bankruptcy do not get paid, they get written off by the creditor as a loss on their taxes.
In terms of credit, you will improve your credit profile and often your credit score. Why? Because it turns out having no debt, or less debt, is better than having debt. That is right, future lenders want to know will you be able to pay us back if we lend you this money. Having less debt assures the lender they will most likely get paid back.
Our guests routinely get credit after bankruptcy. Now, to be clear, everyone’s situation is different. You may have no debt but if you have no income or modest income, you may not get credit. But, if your income is strong, and you have no debt, your credit profile is much stronger!
CONCLUSION
When the time is right, or when you are ready, reach out to Minnesota’s LARGEST Chapter 7 and 13 Bankruptcy website at www.kainscott.com. You will be glad you did!