Pros and Cons of Chapter 7 Bankruptcy
No matter what you choose to do about your financial problems, there are abound to be pros and cons. Every decision is a matter of weighing the relative merits of a course of action and choosing the option that gives you the most benefit. This includes filing bankruptcy, which offers both advantages and disadvantages to the person seeking protection.
The Pros and Cons of Bankruptcy
If you are weighing the pros and cons of filing Chapter 7 bankruptcy, here are some things to consider:
- Pro: Chapter 7 filing can be completed in as little as three months. Chapter 7 is one of the quickest routes to discharge; a Chapter 13 filing, by comparison, can take years to complete. Con: Chapter 7 can remain on your credit report for 10 years. While it takes very little time to receive a Chapter 7 discharge, it is not as easy to remove bankruptcy from your credit report.
- Pro: Exemptions allow you to keep a great deal of your property, including your salary and the property you buy after filing Chapter 7. Con: You will most likely lose property that is not covered by exemptions.
- Pro: You may be able to obtain new credit lines after your discharge. Con: You will likely lose your current lines of credit such as revolving charge or credit card accounts.
- Pro: You may qualify for special mortgage financing for “high risk” borrowers, although this money will come at a premium interest rate in most cases.
- Con: You may not be able to qualify for a mortgage for some time.
- Pro: You can get a “fresh start” on rebuilding your credit almost immediately.
- Con: Filing Chapter 7 now means that you are prohibited from filing bankruptcy for some time in the future if you run into new financial problems.
- Pro: Bankruptcy will remove many of your current debts.
- Con: Bankruptcy will not remove family support obligations, many taxes and most student loan obligations.
Bankruptcy may be one of the best ways to discharge your debts and start fresh in your move toward financial stability. However, it does come with consequence. Be sure you have reviewed the pros and cons of filing bankruptcy with your attorney to determine the best decision for your situation. The attorneys at the Oswalt Law Group in Phoenix are here to help. Contact us today for more information on how filing bankruptcy can benefit you.