Filing for bankruptcy may sound like a terrible decision, but for many people who amassed more debts than they can repay, it could be the only option to start afresh. The most common type of bankruptcy in the US is Chapter 7, which is also called liquidation bankruptcy. Just because you are dealing with too much doesn’t mean you automatically qualify for Chapter 7. This is the precise reason why you need to work with a Hagerstown, MD bankruptcy attorney. A skilled attorney can help you understand your financial situation better. In this post, we are sharing the pros and cons of Chapter 7.
The advantages
- With Chapter 7, you can discharge most of your unsecured debts, including unpaid credit card bills. If you have no other option for debt relief, this could give you a window to start afresh with your finances.
- Chapter 7 is available for individuals and business entities. No matter how much you owe, you can file for Chapter 7 as long as you qualify for the same. This can be determined via a “means” test. Your disposable income should not exceed your state’s median income.
- Once you file Chapter 7 Bankruptcy, your creditors cannot chase you for payments anymore. You don’t have to worry about wage garnishments or unwanted harassment, which could be a huge relief.
- With Filing Chapter 7 Bankruptcy, you could retain some of your personal stuff, including your car and house, depending on whether you can keep paying for those. In other words, you don’t lose everything.
- The whole process of Chapter 7 Bankruptcy can be completed within a few months. You should be able to rework your credit from scratch quickly. Unlike Chapter 13, there is no repayment plan here.
The disadvantages
- Chapter 7 Bankruptcy will impact your credit report. It will show on your credit report for as long as ten years, and this can make it hard to take new loans. If you want to get a new house or make a big purchase, you will have to wait.
- Certain debts are not discharged when you file for bankruptcy. This list includes your student loans, child support, and spousal support. As such, you have to make provisions to make the due payments on time.
- If you need loans after filing for Chapter 7 Bankruptcy, you can get the same, but often at high-interest rates. It can take a while before you can restart your financial journey.
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