Filing for a personal bankruptcy to eliminate burdening consumer debt is no longer considered to be a shameful event that must be avoided at all costs. It is generally recognized these days, for example, that a couple in Arkansas or another state can obtain a mortgage to buy real estate within about three to five years after a bankruptcy discharge. In some cases, the time period is significantly less than three years, depending on the particular circumstances.
Furthermore, the situation is usually much worse for those people who do not file bankruptcy but instead struggle with the inhuman task of trying to catch up with their runaway consumer debt. The fact is that the continual reporting of lagging accounts, defaults and huge balances due weigh down their credit score so substantially that getting a mortgage to buy real estate is unthinkable. The same applies to getting a significant loan or extension of credit for any purpose.
The bottom line is that the waiting period to get back on one's financial feet is far shorter in most cases where a bankruptcy has been timely filed as soon as it is seen that the burden is too huge to tackle piecemeal. The advantage, of course, is that a Chapter 7 filing will immediately put a stop to all further demands for payments by unsecured creditors, such as credit cards and medical debt. In most cases, this means that a married couple or an individual can erase virtually instantly some very large and substantial debt loads.
With a massive block of consumer debt forever wiped out, the pressure on one's credit score is relieved. The specter of delayed payments and many months, sometimes years, of built-up arrearages is taken off of the credit report. The bankruptcy is reported but building up points for a revived credit record is much easier now that the pages of bad accounts have been eliminated. Potential future creditors in Arkansas and elsewhere appreciate that the individual or married couple have wiped out the self-perpetuating complex of disabling debt, and that managing a new debt obligation is now a reasonable prospect to consider.
Source: foxnews.com, "Using personal bankruptcy to hit the reset button on distressed properties", Robert Massi, Aug. 27, 2015