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Chapter 7 Bankruptcy: Pros and Cons

Declaring bankruptcy is inevitably a difficult choice to make. It means giving up your assets when you can no longer afford to continue making payments on your debts or when you are struggling to support yourself or your business. While this likely frustrating and upsetting, it can also be a saving grace, when you are struggling under significant debt. However, before declaring bankruptcy, you must understand the type of bankruptcy that is right for you and your situation. Each of the different forms of bankruptcy applies to different situations and different income levels. Chapter 7 bankruptcy is one of the most common forms of bankruptcy and it has a variety of requirements that you must follow to be eligible. Fortunately, the legal specialists at FindLaw have provided an overview of the pros and cons of choosing Chapter 7 bankruptcy.

Filing for Chapter 7 bankruptcy allows you to cancel any or all of the debts that you are facing. In order to do this, however, you may be forced to liquidate your property and assets in order to repay creditors. This is one of the quickest and simplest forms of bankruptcy available, which is why many people choose this route. In order to qualify for Chapter 7 bankruptcy, you must undergo a means test, which indicates the assets that you have available and if you are capable of repaying any amount of your debt. With the help of a Raleigh bankruptcy lawyer, many of the people who wish to file for Chapter 7 bankruptcy are capable of effectively doing so. Before you decide to move forward with Chapter 7 bankruptcy, however, it is important to understand the pros and cons of this plan of action. Some of the cons include:

  • The inclusion of bankruptcy on your credit report for up to 10 years

  • Loss of property and valuable possessions

  • Loss of all credit cards

  • Difficulty acquiring a mortgage

  • You cannot file for Chapter 7 bankruptcy more than once

Although these negative aspects of bankruptcy may turn many people away, there are also several positives, which can help you and your loved ones, such as:

  • You receive financial relief within 3-6 months of filing

  • Lenders cannot take any further collection action

  • Chapter 7 can relieve even extremely high amounts of debt

  • Many of the things you own are exempt from being sold during bankruptcy

  • Over time you may be able to obtain new lines of credit and rebuild your financial standing

 

This is only a brief overview of the different aspects to consider before filing for bankruptcy. Only an experienced lawyer can truly help you understand your rights and the best course of action to take. Filing for bankruptcy may hurt your pride and your credit, but in the long-term, it can be the right solution to find some relief from serious debt. Your life should not be filled with only financial struggles, and bankruptcy may be able to help.