As you begin to learn more about Chapter 7 bankruptcy, you'll quickly turn your attention to the way this allows you to rid yourself of most debt and gain a fresh financial start.
While this is the primary benefit of Chapter 7 bankruptcy, you shouldn't move forward with the idea that there are no consequences. Instead, you need to compare the pros and cons to ensure that you are making the right decision.
Here are some of the potential consequences of Chapter 7 bankruptcy:
- It will ruin your credit: Don't lose sight of the fact that a Chapter 7 bankruptcy filing will remain on your credit report for a period of 10 years.
- Difficulty securing a loan in the future: As a result of the negative mark on your credit report, you may find it a challenge to secure a loan, such as for a home or car, in the immediate future.
- You can lose some property: It's possible that you will lose some property, as not everything is exempt from sale. If you have luxury assets, for example, the bankruptcy trustee can sell them.
- You will no longer have access to your credit cards: This may appear to be a bad thing, but it can actually work in your favor because it ensures that you don't run up a balance you can't afford to pay.
- Bankruptcy doesn't impact alimony, child support or student loan payments: You will still be responsible for all these things after your Chapter 7 bankruptcy case is complete.
- A Chapter 7 bankruptcy filing may turn into a Chapter 13 case: If the court finds that you have enough disposable income to pay your debts through a repayment plan, you may find yourself with a Chapter 13 bankruptcy on your hands.
Although there are potential consequences of a Chapter 7 bankruptcy, you shouldn't assume that these are powerful enough to stop you in your tracks.
As you focus on the benefits, you may come to find that these overshadow anything that could go wrong along the way.
If you're convinced that Chapter 7 bankruptcy is the best way to start fresh and regain control of your finances, learn more about the process and your legal rights. This knowledge will help you move forward in an efficient and confident manner.