Filing for bankruptcy can be a life-altering experience for individuals and their families. Chapter 7 bankruptcy (commonly referred to as liquidation bankruptcy) enables filers to have their eligible debts erased after only a few months. Unlike Chapter 13 bankruptcy filers, Chapter 7 filers are not responsible for paying back their creditors for 3-5 years before their eligible debts are erased. As a result, Chapter 7 bankruptcy discharge enables filers to obtain a fresh start. Once this process is complete, filers can begin building a strong financial foundation so that the future is more financially stable and manageable than the past has been. There are numerous pros and cons that anyone thinking about filing for bankruptcy should discuss with an attorney before they commit to this process, though. Filing for Chapter 7 bankruptcy can be an excellent option for many households, but it isn’t for everyone.
Chapter 7 Bankruptcy – Pros and Cons
The primary benefit of filing for Chapter 7 bankruptcy is noted above: elimination of eligible debts within a matter of months without the obligation to pay back one’s creditors before the discharge order goes into effect. This debt relief solution allows filers to be freed of burdensome debts (including many kinds of consumer and medical debt) so that they can focus on their immediate financial needs and their future financial stability. Chapter 13 bankruptcy makes debts more manageable, whereas Chapter 7 bankruptcy erases eligible debt altogether.
There are some potential drawbacks to filing for Chapter 7 bankruptcy that should be carefully weighed by each filer. Filing for bankruptcy will negatively impact your credit score for a period of time. You also can’t file for bankruptcy multiple times within a specific period, so that should be kept in mind. Also, if you own unusually valuable property that isn’t covered by your state’s exemptions, it could be sold by your bankruptcy trustee so that your creditors can be repaid with the proceeds from the sale. An attorney can clarify whether your property is likely to be treated as exempt or non-exempt, should you choose to file for Chapter 7 bankruptcy.
Legal Assistance Is Available
It’s important to speak with an experienced Chapter 7 bankruptcy lawyer, like a Chapter 7 bankruptcy lawyer in Bloomington, IL, about your unique financial situation before assuming that bankruptcy either is or isn’t right for you and your family. Bankruptcy is not necessarily the best debt relief option available for some individuals. However, it is the best debt relief option for many. Only after you’ve received informed guidance can you determine whether filing for bankruptcy might be the best option for you and your family. If you’re struggling to make ends meet and pay your debts simultaneously, consider scheduling a consultation with an experienced legal team. Once they learn more about your debts, income, and financial situation, they will be able to advise you of your debt relief options and provide you with the support you need to achieve a fresh start.
Thanks to Pioletti Pioletti & Nichols for their insight into the pros and cons of filing for Chapter 7 bankruptcy.