The Pros and Cons of Filing a Chapter 7 Bankruptcy
The Pros and Cons of Filing a Chapter 7 Bankruptcy
BANKRUPTCY
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.