What Are the Pros and Cons of Filing a Chapter 7 Bankruptcy?
What is Chapter 7 bankruptcy?
It’s the form of bankruptcy most of us think of when we consider the idea of seeking bankruptcy help. In the Chapter 7 bankruptcy timeline, all of one’s applicable debt is eliminated, and the filer never has to pay it back. This is the ideal solution for individuals who have incurred mountains of debt that’s impossible for them to manage.
If your debt is causing your head to spin, you’re likely considering whether or not a Chapter 7 bankruptcy is the right option for you to pursue. It does have several advantages — but with these advantages come a few drawbacks as well.
Do you know as much as you should about the Chapter 7 bankruptcy timeline? To make sure you understand the realities and Chapter 7 bankruptcy facts, here’s a list of the biggest pros and cons of this form of bankruptcy:
Pro: Chapter 7 bankruptcies are quick
Chapter 7 bankruptcy offers a quick, permanent respite from debt. The typical Chapter 7 filing takes anywhere from three to six months from beginning to end. Because of this, it’s a good option for people in urgent situations that need a solution to ending their debt fast. In addition, you will have more time to spend on living your life rather than wasting it in a courtroom for more than a year.
Con: The effects of bankruptcy last much longer
Perhaps the biggest consequence of filing bankruptcy is the long-lasting impact it will have on your ability to be approved for credit, financing and even major purchases like new homes and cars. A Chapter 7 bankruptcy will stay on your credit report for 10 years after you file — it’s important to keep this in mind before you make the decision to file. With healthy spending habits and regular on-time debt payments, you can build your credit score back up successfully.
Pro: Bankruptcy offers immediate relief from your debt
As soon as you begin the process for filing bankruptcy, you will have immediate relief from the pressures of your debt and won’t receive any more calls from creditors and debt collectors. You’ll have the opportunity to start anew with your spending and saving habits, establishing a secure financial future.
Con: Not all forms of debt are covered by this bankruptcy
Unfortunately, some types of debt aren’t able to be discharged by Chapter 7 bankruptcy. Student loans, child support debt and alimony payments are three of the biggest examples. So even after you file bankruptcy, you will still need to make payments toward these debts.
Do you have any other questions or comments for us on the Chapter 7 bankruptcy timeline? Feel free to share your thoughts by leaving a comment below.