When a company or individual files for bankruptcy it is usually to be relieved of heavy, unpayable, debts or to get a clean financial slate in order to be able to move on. When a bankruptcy decision has been made by the courts those who filed for bankruptcy are cleared of all outstanding debts beyond those which can be paid through the company's liquidation. However, the consequence of bankruptcy is to leave those who are bankrupt with a far more limited selection of credit options compared to those who have not gone bankrupt. Most money lenders want to see those who have previously been bankrupt to regain a good credit history before they will offer any loans. As such those who have gone bankrupt usually seek out alternative choices for borrowing money.



A database of bankrupt companies and individuals is kept, known as bankruptcy leads. These contain a variety of information on those who have gone bankrupt, including names. Bankruptcy claims are made through the legal system, and filed by the courts and public records. For companies who make their money by managing credit it is possible to retrieve data from these bankruptcy leads for use in advertising.

As well as the name of the individual or company, the leads also contain the address, dates, and other data on the exact amount of debt and income as well as the results of the claim. Debt consolidation companies, and others who offer similar services, seek out those who have failed to make successful bankruptcy claims and so need financial aid in paying off their debts.

If a claim for bankruptcy is dismissed it means that those who attempted to file for bankruptcy are still liable to pay the creditors any money which is owed. The debtors will be expected to pay the creditors as usual, without any legal stipulations that state otherwise. Debt consolidators find a prime target in those who have had bankruptcy claims dismissed. Credit report firms use information from bankruptcy as part of the data that forms your final credit score. As such, the loans you can receive will be dramatically affected by any previous bankruptcy you have experienced.

There are 6 types of bankruptcy under the United States federal law. These are Chapters 7, 9, 11-13, and 15. Those most frequently used by individuals are chapter 7 and 13. Businesses usually file for Chapter 11. Depending on which chapter is filed under a variety of financial services are available to the bankrupt party. A Chapter 7 filing requires a company to liquefy assets in order to pay off as much outstanding debt as possible. Chapter 13 bankruptcy leaves the bankrupt party in ownership of all business assets but they must instead make payments to creditors through financial earnings made in subsequent years.

All information on bankruptcy leads is sourced from the public bankruptcy records. Given that over a million bankruptcy claims were made during 2006 it can be a lengthy procedure to obtain information on bankruptcies, but there are companies specializing in this service.