Actually, making a decision of declaring bankruptcy isn’t an easy task. It’s not a secret for any person that it impacts both your reputation and self-image. That’s to say, in order to take the right step, you need to have a clear understanding of advantages, as well as disadvantages of Chapter 7 bankruptcy.
For example, one of the benefits of declaring bankruptcy is that it’s not necessary for you to have debts of a certain amount to be able to file for relief. Although if your case turns into Chapter 13, you still can attempt to improve your finances. You can do this by acquiring better conditions of paying off your debts. Additionally, you can preserve all your property as well.
Thus, you should check out here to understand whether declaring bankruptcy is the best option for you.
Pros of declaring bankruptcy
In fact, declaring bankruptcy under Chapter 7 has a lot of benefits. Let’s refer to some of them.
It is true that a bankruptcy remains on your record for a long time. However, the process of declaring bankruptcy under Chapter 7 ranges from three to six months. In case you consider Chapter 7 is the right choice for you, then you should know that repossessions, as well as debt payments and lawsuit, may impact your credit in a negative way. In addition to that, you may find it hard to explain this to a future lender.
You may have the opportunity of keeping most of the things that you own. In some cases, it’s possible to preserve the property that you own. Furthermore, you may also have the opportunity of continuing to receive the salary after filing for bankruptcy.
Moreover, one of the advantages of declaring bankruptcy is that you can acquire new lines of credit between one and three years of filing for Chapter 7. However, you should know that interest rates are quite high in this case.
As a matter of fact, you have only one chance of declaring bankruptcy under Chapter 7 every six years. However, unlike Chapter 7, you can use a Chapter 13 plan repeatedly. Also, you should keep in mind that it still remains on your credit card record.
One of the positive sides of declaring bankruptcy is that in this way your lenders cannot use aggressive collection action. Also, this may result in the alleviation of the majority of your financial obligations.
Additionally, the six-year bar won’t work in your case, if you succeed in acquiring a Chapter 13 discharge after you pay minimum 70% of your unsecured debts.
Cons of declaring bankruptcy
Well, besides advantages you should become aware of disadvantages of declaring bankruptcy as well. To begin with, bankruptcy may have a negative impact on your credit record for a certain timeframe. In other words, it may still appear on your credit report for up to ten years. One of the consequences is losing some of your luxury possessions. Moreover, you may lose all your credit cards as well. Another negative side of bankruptcy is that there is a very little possibility of getting a mortgage.
Declaring bankruptcy under Chapter 7 is indeed a hard decision. The reason is that you cannot do it later if you face similar problems again. That’s to say, you have no legal right to file for Chapter 7 for six years.
Also, declaring bankruptcy doesn’t mean that you don’t have to pay alimony or child support. Do you have student loan debt? Well, don’t think that you can get rid of it by filing under Chapter 7. You should keep in mind that you still have to pay some of your debts, for example, mortgage lien. Don’t forget that you will have to do it even after the completion of the bankruptcy proceedings.
Are you planning to file under Chapter 7? Do you still possess some disposable income? In this situation, you should know it is possible that your Chapter 7 may become Chapter 13. What does this mean? Well, you have to pay your debts between three and five years.
In conclusion, the process of declaring bankruptcy involves a lot of considerations. Thus, you need to consult with an experienced attorney. In this way, you can receive valuable advice whether it’s to file for Chapter 7 in your particular situation.