Credit Repair Glossary

• Bankruptcy

  A bankruptcy is an official action and legal declaration that an individual, family or entity (such as a business) is no longer able to pay their debts.  A party seeking bankruptcy protection is asking for legal protection from their creditors.  There are different types of bankruptcy protection agreements, the most common of which are called Chapter 7 and Chapter 13. Congress recently passed bankruptcy reform legislation that greatly favors creditors, making it more difficult for creditors to obtain bankruptcy protection.  Bankruptcy is very damaging to your credit; however, in some situations it may be the right option.