You may be considering Chapter 7 bankruptcy due to medical expenses, divorce, job loss, credit card debt or unforeseen emergencies. Depending on your situation it may be your best option. But before you make that decision, it helps to consider the pros and cons of filing Chapter 7.
· The process is relatively short, typically three to six months.
· You are allowed to keep most of your possessions, and all your wages and income after the bankruptcy.
· There is no minimum dollar amount or number of debts you must have in order to file.
· As long as you don’t owe money on non-qualifying debts like taxes and student loans, there is no limit to how much qualifying debt you can have discharged.
· Student loan creditors will not be allowed to take collection action against you.
· You should be able to obtain new credit cards within a few years of filing, albeit at a high interest rate.
· The sooner you file, the sooner you can begin to rebuild your credit rating.
· You will be virtually debt-free with limited exceptions like child support, alimony, and student loans.
· If your bankruptcy is dismissed, you can usually try again in six months.
· Chapter 7 bankruptcy destroys your credit and stays on your record for 10 years.
· You will have to sell any property you own that is not determined to be exempt. You are also likely to lose luxury possessions.
· You will not be allowed to keep any of your current credit cards.
· If you don’t have a mortgage already, it may be nearly impossible to get one any time in the near future after you file.
· If you file for bankruptcy and your financial situation becomes worse, you will not be allowed to file again for six years. The six-year waiting period begins on the date you last filed for debt relief.
· You will still be obligated to pay some debts including back taxes, student loans, child support, and alimony.
· You will be required to tell a judge how your financial problems started and why you can’t pay your bills.
· You may not be able to file in some situations involving previous bankruptcy filings. You should seek counsel from an experienced bankruptcy lawyer to learn whether this applies to you.
· Depending on the circumstances, you may be required to continue paying some debts, such as your mortgage.
· If your disposable income is particularly high, the judge may convert your Chapter 7 to a Chapter 13.
There are many factors to consider with regard to filing bankruptcy. Deciding whether to file and determining what type of bankruptcy to file can be just as difficult as actually doing it. That’s one of the many reasons consulting an experienced bankruptcy lawyer is a good idea, rather than relying on an online means test and trying to file by yourself. Having an attorney by your side to help you fully understand the process and guide you through it can be invaluable.