Chapter 7 Bankruptcy: Pros and Cons
Bankruptcy isn’t a process that anybody would want to willingly go through, but it is also a process that can help people who are in debt with nowhere else to go. However, declaring bankruptcy is a more complicated issue than some would like to think. Deciding if you need to file for bankruptcy is just the first step.
The more pressing issue when it comes to bankruptcy filings is what chapter needs to be filed. There are several different chapters, but the two most common are Chapter 7 bankruptcy and Chapter 13 bankruptcy. In today’s post, Groce & DeArmon, P.C. will look at the pros and cons of filing for Chapter 7 bankruptcy.
Pro: Chapter 7 Bankruptcy Moves Quickly
Unlike some other chapters of bankruptcy, Chapter 7 bankruptcy moves forward more quickly. In fact, you could be done in just three months from the date of your original filing. This filing will stay on your record for some time, but the process will typically be quick and painless.
Con: Chapter 7 Remains On Your Credit Report
While Chapter 7 moves very quickly, the aftermath is less quick. Arguably the biggest con to utilizing Chapter 7 bankruptcy is the damage that it will do to your credit report. Not only will it harm your credit, but it can remain on your credit report for up to 10 years.
Pro: Some Property Is Exempt
What makes Chapter 7 different from the other chapters is that it includes losing property to pay off debt. However, most states include exemptions that will allow you to keep many of your belongings, including the things that you need most. This depends on the severity of your debt, but in many cases, you can go through the process without foreclosure or repossession.
Con: You Will Lose Property
While you will likely have many of your most important belongings made exempt through state law, Chapter 7 will always result in lost property. And while it is likely that you will keep most or many of the items that you need, a more serious debt can lead to foreclosure and repossession. Even if that doesn’t happen, you will likely be forced to part ways with your non-essentials, such as memorabilia.
Pro: You Will Be Able To Obtain New Credit
While your credit record won’t be squeaky clean for several years after filing for Chapter 7 bankruptcy, you will be able to obtain new lines of credit within 1-3 years of your original filing. There are even lenders who are willing to take on “riskier clients,” such as those who have gone through a bankruptcy filing.
Con: You Will Lose All Of Your Current Credit
The reason why you have to wait 1-3 years to obtain credit is because you will lose all of your current credit lines. However, this is also done in large part for your own benefit, and you will be able to use credit in the future.
Contact Groce & DeArmon, P.C. For More Information
If you are looking at filing for bankruptcy, you will want to make sure you file for the right chapter. For more information on Chapter 7 bankruptcy and if it is right for you, give Groce & DeArmon, P.C. a call at (417) 862-3706 or contact us online for more information.