People in Connecticut who are considering bankruptcy might be concerned that it will have a permanent effect on their credit and even on their job prospects. However, a study that will appear in the Journal of Finance has found that this is not the case.
The study examined people who filed for Chapter 7 bankruptcy as well as people who had filed for Chapter 13 bankruptcy. With the former kind, people are generally able to discharge most unsecured debt. With the latter, they pay off some debts using a payment plan. A Chapter 13 bankruptcy remains on a person’s credit report for seven years while a Chapter 7 bankruptcy remains on it for 10 years.
The study found that people who filed for Chapter 13 bankruptcy had access to credit and loans earlier than those who filed for Chapter 7. Chapter 13 filers were more likely to have a mortgage after eight years compared to Chapter 7 filers, who still had the filing on their record. However, Chapter 13 filers also accumulated more debt. The study found that filing for bankruptcy had no effect on a person’s employment and was not an accurate predictor of whether a person remained at a particular job. Overall, the poor credit report did not predict whether an individual would be a quality employee.
These and other potential stigmas about bankruptcy could worry some people, but a bankruptcy can also provide a fresh financial start. An attorney may be able to discuss this and other options for debt relief as well as whether the person is eligible for Chapter 7 or Chapter 13 bankruptcy and assist in completing the necessary paperwork.