The Pros and Cons of Filing a Chapter 7 Bankruptcy

Chapter 7 bankruptcy, often called "The Fresh Start", is a common debt relief option. It involves erasing debts and providing a fresh financial start.

Here are the key aspects:

Upsides of Chapter 7:

· Immediate relief from debt collectors upon filing.

· Permanent debt relief typically within months.

· High success rate for debt discharge.

· Property retention for most filers.

· Access to credit and banking remains.

Chapter 7 Stops Collection Efforts:

Upon filing, an automatic stay halts all collection actions, including calls, garnishments, and foreclosures.

Permanent Debt Relief:

Unsecured debts like credit cards and medical bills are eliminated upon a bankruptcy discharge.

Property Retention:

Most Chapter 7 filers keep their belongings protected by exemptions.

Access to Credit:

After filing, many receive numerous credit card offers, aiding in credit rebuilding.

Cons of Chapter 7:

· Ineligibility if income exceeds state median or has disposable income.

· Temporary credit score drops and potential increase in interest rates.

· Not all unsecured debts, such as alimony and some taxes, are discharged.

· Possibility of losing certain expensive items (nonexempt property).

· Bankruptcy discharge only relieves personal obligation, not the co-signers.

Cost of Filing:

Fees include court filing fees (around $338), attorney fees (averaging $1,500), and costs for mandatory credit counseling and debt education courses.

Considering Chapter 7 Bankruptcy?

Debt and bankruptcy issues can be complex, especially when medical, divorce, and employment issues arise lurk in the background.

Those considering bankruptcy should contact a debt representation attorney to discuss their situation and analyze available options.