There are many benefits of Chapter 7 bankruptcy, including the ability to quickly discharge debt that has been dragging you down. Best yet, it puts you in position for a fresh start.
However, there are some potential downfalls to be aware of as well. These include but are not limited to the following:
- A Chapter 7 bankruptcy typically remains on your credit report for up to 10 years
- You may lose property that's important to you
- You will have to turn over all of your credit cards
- A Chapter 7 bankruptcy makes it difficult to obtain a mortgage (or any other type of loan) in the immediate future
- A Chapter 7 filing has nothing to do with child support, alimony or student loans (you'll still owe these after everything is said and done)
- You will have to explain to the court what went wrong with your finances, which can be embarrassing for some
As you can see, there are things to worry about with a Chapter 7 filing. However, when you consider the many benefits, you need to ask yourself one question: Are these really that big of a deal?
Once you compare the pros and cons, it's not hard to determine if Chapter 7 bankruptcy is right for you. If the pros outweigh the cons, take the time to better understand the system and your legal rights.
As long as you qualify, you can push forward and see where you end up. You may find that filing in the near future can save your finances and get you back on track.
Source: FindLaw, "Pros and Cons of Declaring Bankruptcy under Chapter 7," accessed Feb. 27, 2018