Are you looking for a way to get out of debt and have been considering chapter 7 bankruptcy? If so, it will help to know the following pros and cons of using this method to discharge debts and get a fresh start.
Pro: Chapter 7 Discharges Almost All Unsecured Debts
The biggest benefit of using Chapter 7 bankruptcy is the number of debts that it will get rid of. Thankfully, the vast majority of your unsecured debts, which are those that are not secured with any assets, will be discharged. Personal loans, credit cards, medical bills, and debts of that nature will completely go away. There are some restrictions, with the big two being taxes and student loans, even though they are not secured. By the end of the bankruptcy, you'll no longer be required to pay those discharged debts back.
Pro: Chapter 7 Issues An Automatic Stay
Another advantage of chapter 7 bankruptcy is that it issues an automatic stay as soon as you file your bankruptcy case. If your home is being foreclosed on, the foreclosure process will stop immediately. If you are getting contacted by creditors constantly, those calls will be stopped immediately. It will give you some relief from being harassed by these creditors as you start to go through the bankruptcy process.
Pro: Chapter 7 Offers A Fresh Start
The biggest positive about Chapter 7 bankruptcy is that you come out the other side of the process with a fresh start. There are no repayment plans that you must adhere to or debts that are partially discharged. It is the best way to start over financially.
Con: Your Credit History Will Take A Hit
One of the obvious disadvantages that bankruptcy has is that your credit history will be impacted for quite some time. Lenders will be able to see that you used bankruptcy in the past, and may be more hesitant to loan you money. Your credit score will recover after a few years, but that bankruptcy is considered when looking to borrow money in the future.
Con: You May Lose Assets
While a lot of your debt is discharged in a chapter 7 bankruptcy case, it is also possible to lose assets as well to help pay off your creditors as much as possible. While there are exemptions for houses, cars, retirement accounts, and other basic things, there may not be exemptions for everything. Be prepared for some assets to be liquidated to pay off your debts.
Contact a local bankruptcy attorney to learn more.Share
23 March 2021
Hello, my name is Neil Gamford. Welcome to my site about bankruptcy proceedings. After my divorce, I was left near penniless and without a place to stay. I was paying all of my income to alimony and my remaining debts. Although I had a solid payment plan in place, it was getting difficult to cover my financial obligations without a home. Luckily, I met with a bankruptcy attorney, who helped me find a way to discharge my debts and start over. I hope to share the information I learned throughout that process with you through this site. Please feel free to visit anytime.