Tennessee residents whose credit scores have been negatively impacted by their substantial debt may not see a significant impact on their scores if they file for bankruptcy. However, depending on the type of bankruptcy that is filed, it may be 7 to 10 years before they may be approved for new credit accounts such as a home loan.

Individuals typically file for Chapter 7 or Chapter 13 bankruptcy. Chapter 7 filers will see the majority of their debts wiped away. Chapter 13 filers will use a payment plan based on their income to pay on their debts for a certain number of years.

There are certain debts that cannot be resolved by either type of bankruptcy. These debts may include taxes, student loans, child support and mortgages.

While people whose credit scores are already low, such as between 400 and 600, when they file for bankruptcy may not see a significant difference in their scores, the same cannot be said for bankruptcy filers with good credit scores. Those filers should expect to see a significant drop in their scores when they file.

Addressing the reasons for not being able to control one’s debt should be a priority whether bankruptcy is being filed or other avenues are being pursued to get out of debt. This may entail learning how to create a budget and adhere to it and setting aside money in savings so that the funds will be available should an emergency occur in the future.

A bankruptcy attorney may examine a client’s finances and debts and advise whether they are likely to benefit from filing for Chapter 7 bankruptcy. The attorney may explain how people with excessive debts may use the legal process to stop creditor harassment, cease wage garnishment and obtain a fresh financial start.