There is no denying the fact that there are many benefits associated with Chapter 7 bankruptcy. Nobody looks forward to the day when they file for Chapter 7, but they realize that this could be the first step in putting them on a better financial track.
Before you file, you'll want to learn more about the drawbacks. This will give you the information you need to make an informed and confident decision.
Here are some of the primary drawbacks:
-- Bankruptcy will have a negative impact on your credit score for up to 10 years.
-- You can lose property that is non-exempt.
-- You will more than likely lose access to all of your credit cards.
-- Once you file for Chapter 7, it will make it difficult to receive a mortgage for a home (especially in the near future).
-- Bankruptcy does not help with all of your financial obligations. Student loans, child support and alimony are not impacted by Chapter 7 or Chapter 13.
Along with the above, here's something else to remember: you are not legally permitted to file for Chapter 7 bankruptcy if you went through this process (or Chapter 13) within the past six years.
There are both pros and cons of Chapter 7 bankruptcy. As somebody considering this financial plan, you need to compare the finer details to ensure that you're making the right decision.
Once you know exactly what you're getting into, you can decide what to do next. For many, the benefits of Chapter 7 far outweigh any of the potential drawbacks. An experienced attorney can help you determine if this is the right choice for your financial situation.
Source: FindLaw, "Pros and Cons of Declaring Bankruptcy under Chapter 7," accessed Dec. 29, 2016