Filing Chapter 7 Bankruptcy? Know The Pros And Cons
If you are suffering from a large amount of debt, you may have already considered filing Chapter 7 bankruptcy. Filing Chapter 7 bankruptcy does allow you to start over again financially with a clean slate, if you successfully discharge most of your debt. While it is easy to focus on this one benefit, there are others, as well. Unfortunately, there are also some drawbacks and it is important to know what these are before you file.
What is Chapter 7?
Chapter 7 bankruptcy is the most common type of bankruptcy people file. In its most basic sense, Chapter 7 allows you to liquidate your assets to repay your creditors and debt collectors, while discharging the remaining debt that is unpaid. You do not have to repay any debt that is discharged through bankruptcy, and creditors will stop calling you right away.
Chapter 7 Bankruptcy: The Pros
The biggest benefit that comes with filing Chapter 7 bankruptcy, and the reason most people choose this method, is because it allows you to discharge most, if not all, of your debt. A Chapter 7 bankruptcy is also the best option for people that do not qualify for Chapter 13 bankruptcy. For example, if your income is too high, you may not qualify for Chapter 7 and may have to file Chapter 13 instead. In this case, you would have to repay the majority of your debt within three to five years. Chapter 7 does not have such a repayment plan, which is another big benefit with this type of bankruptcy.
Chapter 7 Bankruptcy: The Cons
Filing Chapter 7 has many benefits, but there are drawbacks to the process, too. One of these is that your assets will be liquidated, although there are also some exemptions to this. For example, if you had a $75,000 exemption on your home, you could keep it regardless of the value of the home. However, if you only had an exemption of $45,000, and you cannot do anything else to lower the value of the home, under the law it will be sold due to the fact that this is less than half of what you could keep it for legally if you did not file bankruptcy.
You will also likely lose some of your property in Chapter 7 bankruptcy, as some of your assets are sold to repay the debt to your creditors. Also, filing Chapter 7 bankruptcy will remain on your credit report for seven years, although this is true for any type of bankruptcy you file.
Our Bankruptcy Lawyers in Orlando Can Give You the Best Chance of Success
Filing Chapter 7 bankruptcy does give you a fresh start, but there are drawbacks to the process. At Anderson & Ferrin, our Orlando bankruptcy lawyers will shield you as much as possible from the drawbacks and give you the best chance of a positive outcome. Call us today at 407-412-7041 or fill out our online form to schedule a free consultation and to learn more about how we can help.