Many people in Arkansas struggle with unrepayable debt, including medical bills, auto loans and credit card balances. They may face a declining credit score, collection calls and even lawsuit threats. Still, they’re often hesitant to declare personal bankruptcy. They might fear the long-term hit to their credit score, even if they’re already struggling with poor credit. Furthermore, they may worry about the effects of bankrtupcy on other areas of life, such as if they will have more difficulty seeking employment after filing.

However, one study suggests that filing for bankruptcy has little effect on a person’s success in finding a job. Because of the large number of bankruptcy filings after the financial crisis of 2008, there is a significant bank of data related to the outcomes experienced by those who filed for Chapter 7 or Chapter 13 bankruptcy during that time. Chapter 7 bankruptcy requires that a person’s assets be liquidated, and their eligible debts are erased. The bankruptcy flag remains on a credit report for 10 years. On the other hand, Chapter 13 bankruptcy, often used by people with too high an income for Chapter 7, allows people to keep their assets and set up a repayment plan for their debts. This type of bankruptcy lasts on a credit report for seven years.

That three-year gap allowed researchers to view differences in employment and financial health between the two groups while one retained the bankruptcy flag. They found that while the people without the flag were more likely to have mortgages and high-limit credit cards, both were equally likely to have positive employment outcomes.

For those dealing with insurmountable obligations, personal bankruptcy can offer a welcome opportunity for debt relief. A bankruptcy attorney may offer guidance on filing for Chapter 7 or Chapter 13 and moving toward a new financial future.