Chapter 7 bankruptcy is a very common type of bankruptcy filing. Many people choose this type of bankruptcy every year. But what are the benefits to Chapter 7 bankruptcy? And what are some of the downsides to such a bankruptcy filing? Today, let's examine some of the pros and cons.
Let's start with some of the positive elements to a Chapter 7 bankruptcy filing:
- Though there aren't guarantees in terms of bankruptcy exemptions under Chapter 7, there is some leeway when you file for Chapter 7. Some assets can be kept when the Chapter 7 process turns to the liquidation process, depending on state law.
- While a hit to your credit score is to be expected as a result of Chapter 7 bankruptcy and though the bankruptcy will remain on your record, the process itself is relatively quick. Within 3-6 months, you can expect your bankruptcy to be complete.
- Any aggressive actions by creditors or attempts to collect by your creditors or debt collectors must immediately stop once you file for bankruptcy.
And here are some negatives associated with filing for Chapter 7 bankruptcy:
- The liquidation process can claim a number of your assets in order to pay off your debts.
- The hit to your credit score will likely last for quite some time, and you won't be able to get credit cards in the aftermath of the bankruptcy.
- You won't be able to declare bankruptcy again for at least six years after a Chapter 7 filing.
Source: FindLaw, "Pros and Cons of Declaring Bankruptcy under Chapter 7," Accessed July 28, 2017