There is no question as to whether the process to declare bankruptcy can be overwhelming. Not only does a declaration of bankruptcy affect your credit, it can also affect your image and your reputation. However, it can also improve your life short term because 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 to debt discharge is typically no longer than six months. So, although you may have to face the consequences of having it negatively affect your credit, you can be free from most or all of your debt within a relatively short period of time.
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 were not exempt by your court appointed trustee.
The benefit is that many states allow exemptions so that many of your assets will be excluded from the bankruptcy. In addition, you will be able to keep wages you earn and property you obtain after your bankruptcy has been discharged.
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, there are some lenders who specialize in approving financing for borrowers who are considered high risk. These lenders choose to look beyond the borrower’s past and get them the boost they need to improve their financial future.
You Will Not Be Relieved Of Certain Obligations
Certain debt obligations such as alimony, tax debts and child support will not be discharged. You will still be required to meet these obligations.
The only way you may be able to have these obligations included in the discharge is to get a court order from the family court. Even if you do not get the court order, your finances will be freed from other debts so you can meet your obligations.
These are a few of the pros and cons related to a declaration of bankruptcy under Chapter 7. Schedule a consultation with an experienced bankruptcy attorney to decide if bankruptcy is your best option.
Not sure if bankruptcy is the best choice for your financial situation, or if you should consider other debt relief options? Contact us for more information and a free consultation.