Most things in life are "give and take", and Chapter 7 bankruptcy isn't much different. It's true that Chapter 7 bankruptcy can be an enormous lifeline to individuals who are suffering from crippling debt, but it does come at a certain cost. Making the decision to file for Chapter 7 bankruptcy can be very difficult with the sheer volume of options to weigh and factors to consider. With this in mind, let's take a look at the pros and cons of declaring Chapter 7 bankruptcy in an effort to help you make the decision.
Cons of Bankruptcy
Bankruptcy does show up on your credit, which is what gives individuals in debt some pause. A Chapter 7 bankruptcy is likely to remain on your credit report for up to 10 years. Additionally, you may have to give up some of your property to the Bankruptcy Trustee to sell in order to pay back your creditors. When you file bankruptcy, your credit card providers will also cancel your credit cards.
The timing of bankruptcy is important as well, due to the fact that when you file Chapter 7, you might not be eligible for another discharge for several years after a successful bankruptcy. If your bankruptcy has been dismissed, you might also have complications with respect to when you can refile again. Lastly, there are some debts which you may still be on the hook for after obtaining a discharge from Chapter 7 bankruptcy, which include mortgage liens, alimony, student loans, and child support.
Pros of Bankruptcy
For nearly every downside of Chapter 7 bankruptcy, there is an upside. For example, even though bankruptcy stays on your credit report for a considerable amount of time, using bankruptcy can eliminate your debt in as little as four or five months, making it the fastest means of debt relief available. Additionally, when filing Chapter 7 bankruptcy, you may be able to discharge your unsecured debt and keep all your property and belongings using exemptions at the same time.
Even though you'll lose them initially, you may be able to obtain a credit card after bankruptcy in as soon as a year, although you should expect higher interest rates. Also, by eliminating other types of debt, you will have more cash to devote to paying your mortgage and other priority debt such as alimony and child support.
Chapter 7 Bankruptcy Attorneys in California
The overall process of bankruptcy can be confusing and challenging but hiring an Sacramento Bankruptcy lawyer can help eliminate the confusion and keep your valuable assets if bankruptcy is the right choice for you. An experienced bankruptcy lawyer will also be able to explain how the Bankruptcy Code can help you obtain relief from debt.