The Pros and Cons of Filing a Chapter 7 Bankruptcy
Deciding that you need to file a Chapter 7 bankruptcy doesn’t mean you’re a failure — it simply means you can no longer manage your debts and need to seek a new start with your finances. In 2013 alone, approximately 728,833 Chapter 7 bankruptcies were filed, so you’re definitely not alone if you think this form of bankruptcy is right for you.
Knowing the consequences of filing bankruptcy with a Chapter 7 bankruptcy attorney is an important step to take before you start along the Chapter 7 bankruptcy timeline. That’s why we’ve compiled this list of the top pros and cons of filing a Chapter 7 bankruptcy:
Pro: Chapter 7 bankruptcy provides immediate relief from debt
Creditor harassment can be a major source of stress, especially when you’re unable to make your loan payments. But as soon as you seek out bankruptcy help from a Chapter 7 bankruptcy attorney, the constant calls from debt collectors will cease immediately, offering the peace of mind you deserve.
Con: Chapter 7 bankruptcies affect your credit score for a long time
Filing a Chapter 7 bankruptcy will go on your credit report — and it will stay there for 10 years after you file. This can make it difficult for you to obtain loans and financing for large purchases; however, if you maintain good financial habits, you can slowly rebuild your credit score.
Pro: Chapter 7 bankruptcies rid you of all your debt — no matter how much
There is no minimum or maximum to the amount of debt that can be erased during a Chapter 7 bankruptcy; nor is there an income limit. That makes this type of bankruptcy good for virtually any income level that has found itself overwhelmed by financial burdens.
Con: There are certain types of debt not covered in a Chapter 7 bankruptcy
Unfortunately, some debts aren’t covered under a Chapter 7 bankruptcy. These include student debt, child support and alimony. Only defaulting on student loans or obtaining a court order to be exempt from child support or alimony will get you out of them.
Have any other thoughts to share about how to file bankruptcy? Share with us and your fellow readers in the comments below. Get more on this here.