Many people have the misconception that filing for bankruptcy is a chance to escape any financial troubles you may be facing. However, it is not quite that simple. Before you decide to file for bankruptcy, you should consider both the advantages and disadvantages of doing so. An experienced bankruptcy attorney has likely handled hundreds of bankruptcy cases and can advise you on whether bankruptcy is the right choice for you.
Advantages and disadvantages of Chapter 7 bankruptcy
Most people who file for bankruptcy will go for a Chapter 7 bankruptcy if they meet the eligibility requirements. The entire Chapter 7 bankruptcy process generally only takes three to six months and requires minimal filing fees. This will allow you to move forward with your life as soon as possible.
Another benefit to Chapter 7 bankruptcy is that it gives you the opportunity to discharge any unsecured debt you have, including:
- Credit card bills
- Overdue rent payments and utility bills
- Medical bills
- Personal loans
Chapter 7 bankruptcy also stops creditors from coming after you and allows you to keep the majority of your most important and necessary assets, including your house and car.
However, there are also some disadvantages to a Chapter 7 bankruptcy. First, some debts will not be discharged, including:
- Student loans
- Child support
- Certain taxes
Additionally, while you will be allowed to keep many assets, some non-exempt property (e.g., luxury goods or vacation homes) may be sold off to pay off creditors. The bankruptcy will also remain on your record for up to 10 years, which can be harmful to your credit and stop you from getting a loan.
While Chapter 7 bankruptcy has its advantages, it is not the best option for everyone. An attorney specializing in bankruptcy law can review your options with you and help you make the best decision for your family and yourself.