When people in Ohio struggle with overwhelming debt, they may consider personal bankruptcy. However, many factors may hold people back from taking the leap, even as they deal with relentless collection calls and a declining credit score. Some may worry that they will never obtain credit in the future, while others may be concerned that they will be held back in their careers. One study indicates that bankruptcy filings may have little effect on job opportunities, news that may provide some relief to people considering filing for Chapter 7 or Chapter 13 bankruptcy.
Researchers used information from people who filed for bankruptcy during the financial crisis of 2008. There are two kinds of bankruptcy, Chapter 7 and Chapter 13. While a Chapter 7 bankruptcy, involving liquidated assets, stays on a credit report for 10 years, a Chapter 13 bankruptcy, involving a repayment plan, stays on the credit report for seven years. That three-year gap provided researchers with a period to look at differing outcomes for both groups of bankruptcy filers. The study found that people who filed for Chapter 13 bankruptcy were more likely to have obtained mortgages and credit cards in the three-year period after the information was no longer available on their credit report.
However, they also found that a bankruptcy on a credit report appeared to make little difference in terms of employment, including hiring, termination or longevity at the job. Of course, some workers may still face hardships, especially in professions where employers demand to see a credit report before extending an offer.
People going through bankruptcy, according to these results, were able to find consistent employment as well as debt relief from the crushing weight of bills. A bankruptcy attorney may offer advice as to whether Chapter 7 bankruptcy may help people to find a new financial future.