If you’re currently experiencing some financial hardship, and you’re planning to file for bankruptcy, then you should understand Chapter 7 bankruptcy. The truth about Chapter 7 bankruptcy is that it will protect your property and help you get out of debt. This article will outline some of the pros and cons of Chapter 7.
However, before you take the step of filing for bankruptcy, you should be certain that’s the decision that’s best for you since you can’t change your decision. Let’s dig right into the pros and cons of Chapter 7 bankruptcy.
Pros and Cons of Chapter 7 Bankruptcy
First, let’s cover the pros of Chapter 7 bankruptcy.
PROS
- It is more affordable than. The cost of filing for Chapter 7 bankruptcy is less than what you’ll have to pay for Chapter 13 bankruptcy. That said, fees may be different by state. For example, the Florida Chapter 7 bankruptcy cost may be higher than the Illinois Chapter 7 bankruptcy cost, but the numbers could be similar.
- The Chapter 7 bankruptcy process is quick. The duration for completing a no-asset Chapter 7 bankruptcy is usually within 4 to 6 months.
- You can keep your property. A lot of individuals who file for Chapter 7 Bankruptcy are allowed to keep their property. However, you may lose your property in some instances.
- Also, Chapter 7 bankruptcy will get rid of any judgment in favor of your creditors.
- Prevents or Gets Rid of Deficiencies — first, let’s answer the question; what is a deficiency? This is the amount of money that a debtor owes a creditor after repossession or foreclosure. Summarily, it means that you owe the debtor after they’ve taken possession of your asset. When you file a Chapter 7 bankruptcy, it gets rid of a deficiency.
- Even if the trustee liquidates your asset during a Chapter 7 bankruptcy, and the money can’t settle your debt, you still won’t be liable to any debt.
- Creditors have to stop pursuing you for your debts once you file for bankruptcy. If you’re sued by a creditor for not meeting up with your financial obligation, the Chapter 7 bankruptcy will stop the lawsuit. For example, you could be getting mailers or lawsuits from PO Box 1280 Oaks PA. If the debt is dischargeable by Chapter 7 bankruptcy, then your lawsuit won’t resume till after the judgment.
Cons
- Loss of property — Chapter 7 is also called liquidation bankruptcy because properties not covered by exemption law will be sold by the Chapter 7 trustee that is in charge of your case. So, you may lose property in a Chapter 7 that you wouldn’t lose in a Chapter 13 bankruptcy.
- After selling the property, then the trustee will then use the money to pay off your unsecured debt.
- Not all debts are dischargeable — Debts such as taxes, student loans, child support, government debts, restitution, and some government debts are not dischargeable by this type of bankruptcy. If you file for a Chapter 7 bankruptcy discharge, you will continue to owe those debts.
- Hard to prevent repossession and foreclosure — Since you can’t schedule a repayment plan after getting a Chapter 7 bankruptcy, it means that you have to pay up your car loan. You need to pay a mortgage loan on time as a refusal to do so will lead to repossession and foreclosure. But if you file for a Chapter 13 bankruptcy, then you have 3 to 5 years to pay up. That said, some people believe that their Chapter 13 payment is too high, so getting the right Chapter 13 payment plan that is affordable may be important.
- Income Requirement — Not everyone who’s in financial distress can qualify for a Chapter 7 bankruptcy has there are income requirements. You can check if you’re qualified for this type of loan by taking the income means test. If your household income is more than the median income, you may not qualify for the discharge.
Should I File A Chapter 7 Bankruptcy Case?
It is difficult for anyone to come up with a decision whether they need a Chapter 7 bankruptcy or not. To ensure that your decision is the right one, you should analyze your debts, assets, expenses, and income. Also, keep in mind that bankruptcies do have slight variations depending on where you file. So, if you are planning to file Chapter 7 bankruptcy in Indiana, you’ll want to make sure that you are aware of what Indiana’s requirements are before moving forward.
If you’re still confused if you should file a Chapter 7 bankruptcy, then you should seek the services of a bankruptcy attorney. Learn more or read about how you can file for bankruptcy online to grow your understanding.
