Declaring Chapter 7 Bankruptcy: Pros And Cons

Declaring Chapter 7 Bankruptcy: Pros And Cons

If you’re considering the option of filing for bankruptcy, sometimes being the pros and cons of chapter 7 bankruptcy can help you properly weigh the decision. If you’ve been struggling financially for some time, one of the options that you might be considering is filing for Chapter 7 bankruptcy. Even though Chapter 7 can be a valuable tool for helping you control your debt and begin rebuilding your credit, declaring bankruptcy is not a solution that should be considered as a first and best option. Here are some of the benefits and disadvantages of choosing the file for Chapter 7.

Pros:

You Can Relieve Financial Obligations Quickly

Under a Chapter 7 bankruptcy, you can relieve your financial obligations and have your debts discharged quickly at the end of the chapter 7 case. Under a Chapter 13 bankruptcy could be responsible for repaying your debts over 3-5 years. Most Chapter 7 bankruptcy proceedings take place over just four months and you can discharge debts including credit card balances, medical bills, past-due rent, money owed under your lease, civil court judgments, personal loans, and other forms of unsecured debt. Once your debts are discharged and once the bankruptcy is filed writers can no longer work at taking collection actions against your property or against other people that may have cosigned on loans with you. 

Your Most Important Assets Will Be Protected

A number of possessions may be subject to liquidation throughout a chapter 7 case but exemptions make it possible to keep hold of your important assets. Exemptions under a chapter 7 case can extend to your primary residence, vehicles under a certain value, many of the personal effects and home goods that you have inside your main residence, and more. It may come as a relief to you to ensure that you can start fresh while still having a vehicle, a home, and a similar standard of living. 

You Can Fix Your Debt Fast

Cases are finalized in as little as 3 to 6 months with very little complexities are extenuating circumstances. As soon as you file for bankruptcy you will have an automatic stay placed on your accounts where you can no longer be contacted by creditors or have creditors remove funds from your account to pay debts. Compared to other types of debt-relief options, a chapter 7ET is one of the fastest ways that you can fix your debt. 

Cons:

Extra Property May Be Liquidated

It’s important to remember that some of your possessions may not be covered under the exemptions in chapter 7. Before you receive a discharge, a court-appointed trustee will be able to liquidate additional property that’s not protected under Chapter 7 petitions. This could mean that extra vehicles, art collections, investment properties, investment accounts that are not linked to retirement, and more could be sold off and distributed in order to pay off your creditors. 

You Must Qualify For An Approval

Not every seeking Chapter 7 bankruptcy will receive approval. People must meet a range of requirements for eligibility including having a monthly income that’s below the state’s average. There is also a means test that you could qualify for which also suggests that you have no prior bankruptcy dismissals within 180 days of filing and that you’ve completed some form of credit counseling within 180 days of filing a petition. To meet the qualification for the means test, it’s usually best to speak to a bankruptcy attorney as you begin the process of filing. 

Stays On A Credit Report

Filing for Chapter 7 bankruptcy will stick to your credit report for at least 10 years after you file. Choosing the file for bankruptcy could have you unable to qualify for a mortgage with a low-interest rate, a series of credit or loan products, or other items that you may need in the future. Rather than risking your immediate financial future for fast debt relief, it may be more advantageous for your situation to consider the option of choosing a credit repair instead of filing for bankruptcy. 

The Process Is Difficult To Navigate

The process of filing for a chapter 7 bankruptcy can sometimes be given go to navigate. If you are interested in seeking help that can make sure your debt can be relieved, it’s usually best to have an expert on your side. If you are interested in navigating your bankruptcy proceedings a bit easier, contact our staff today for the support you need during the filing process. We can help you meet the requirements and advise you on the best way to prepare for your chapter 7 bankruptcy filing. We work with your creditors, help you find applicable financial counseling, and more.