Like many in Davidson, and throughout Tennessee, who are struggling with debt, you may have considered filing for bankruptcy. While Chapter 7 is the most common type of filing, it is not necessarily suited for every situation. As such, it may help to understand the advantages and downsides of filing Chapter 7 bankruptcy in order to determine if it is the right option for your circumstances.
There are a number of advantages to declaring Chapter 7 bankruptcy. The Chapter 7 bankruptcy process is much shorter than other options. As such, you will be able to begin re-establishing your credit much sooner. Through this type of filing, much of your qualifying debt will be discharged. This not only stops creditor harassment, but also enables you to regain control of your finances. Additionally, you will not have to forfeit your future earnings, or promise all of your disposable income to a repayment plan, in order to receive this type of protection. You may be required to liquidate certain assets and properties in a Chapter 7 bankruptcy. However, there are a number of state and federal exemptions, which may allow you to keep most of your household possessions.
One major downside of a Chapter 7 bankruptcy is that it may cost you some of your property. According to the U.S. Courts, the bankruptcy trustee may take your nonexempt assets when you file for Chapter 7 bankruptcy. Those assets are then sold, and the proceeds applied towards some of your debts. While some of your debts may be discharged in a Chapter 7 bankruptcy, others may not be. Depending on your circumstances, remaining obligated to pay certain debts, including your student loans, alimony and child support payments, may be problematic. Furthermore, a bankruptcy filing will stay on your credit report for as many as 10 years. This may impact your ability to obtain lines of credit in the future, including getting a mortgage loan.
This post has provided an overview of the benefits and drawbacks of Chapter 7 bankruptcy. However, you should keep in mind that each situation is unique. Therefore, this should be taken only as general information, and not be considered legal advice.