There is no question as to whether declaring bankruptcy can be overwhelming. A declaration of bankruptcy affects your credit. It can also affect your image and reputation. However, it can also improve your life short term. For instance, it will prevent creditors from contacting you by phone and mail. There are several other pros and cons that will help you decide if filing for Chapter 7 is a choice for you.
The Bankruptcy Will Remain On Your Credit Report
A Chapter 7 declaration of bankruptcy can stay on your credit for almost a decade. This can make it difficult for you to get certain types of financing.
On the other hand, the entire process of filing is typically no longer than six months. So, although you may have to face the consequences of it negatively affecting your credit, you can be free from most or all of your debt within a relatively short time period.
Also, if you do not file for bankruptcy, defaults, judgments, missed payments and repossessions can affect your credit more than bankruptcy.
You May Lose Your Property
Under a Chapter 7 bankruptcy filing, you may lose any property or assets that your court-appointed trustee did not exempt.
The benefit is that many states allow exemptions. So, many of your assets will be excluded from the bankruptcy. Also, you will be able to keep the wages you earn and the property you obtain after the courts discharge your bankruptcy.
You Will Not Be Able To Get Approved For a Mortgage
As previously stated, declaring bankruptcy will make it more difficult for you to get approved for certain types of financing. And you may find it difficult to get lenders to approve you for a mortgage.
Fortunately, some lenders specialize in approving financing for high-risk borrowers. These lenders choose to look beyond the borrower’s past and give them the help they need to improve their financial future.
You Will Not Be Relieved Of Certain Obligations
The bankruptcy court will not discharge certain debt obligations such as alimony, tax debts, and child support.
A court order from the family court may be the only way to have these obligations included in the discharge. Even without the court order, the court will free your finances from other debts. This will allow you to meet your other financial obligations.
These are a few of the pros and cons related to a declaration of bankruptcy. Schedule a consultation with an experienced bankruptcy attorney to decide if bankruptcy is your best option. Contact us for more information and a free consultation.