Bankruptcy has had a lot of stigma, with people assuming the worst from the name. However, it is a financial tool that gives you a clean slate when facing a financial crisis. The act is often considered an easy way out for lazy people or a grave mistake that will harm your credit score.
The truth is that there are drawbacks and upsides to filing for Chapter 7 bankruptcy. It’s not an easy decision to make and can often seem complex. This is why we have compiled this guide that highlights the pros and cons of Chapter 7 bankruptcy.
Chapter 7 Bankruptcy Pros and Cons
This type of bankruptcy is designed to give individuals a fresh start after facing a difficult financial situation. However, this is not the ideal solution for everyone. Therefore, you must analyze the following pros and cons of Chapter 7 bankruptcy.
Pros of Chapter 7 Bankruptcy
● Protects Your Future Wages
Once you file for Chapter 7 bankruptcy, your future wages will be protected. The government will not be able to use it for garnishing and re-paying creditors. Hence, your income will be entirely yours to keep.
● Gives You Debt Relief
Perhaps the most prominent benefit of filing Chapter 7 bankruptcy is the instant debt relief it provides, which would feel like a huge burden off your shoulders. When you file for this bankruptcy, most of your debt is discharged, including your bills, credit card debt, and loan payments.
● Relieves Your Emotional Stress
The financial stress of having debt and constantly being contacted by creditors can take an emotional toll on you and your relationships. When you file for Chapter 7 bankruptcy, you won’t have to experience this emotional stress any longer. It will give you a clean financial slate to start from.
Cons of Chapter 7 Bankruptcy
● Harmful Impact on Your Credit
A major disadvantage of filing for Chapter 7 bankruptcy is the significant damage it can do to your credit. Chances are that it will also reduce your credit score, making it difficult to get loans or mortgages. Luckily, you can start rebuilding your credit right away.
● Loss of Some Assets and Property
Chapter 7 bankruptcy will likely protect your assets, like your home, but all other ones, such as your cars or luxury items, will be taken away. These will be sold to pay off your debts.
● It Can Be Costly
Another major disadvantage of filing for Chapter 7 bankruptcy that most people don’t talk about is how expensive it can be. Filing fees for this type of bankruptcy are over $300, and then there are Chapter 7 bankruptcy attorney fees that you need to pay. Depending on your income, there is a chance that you qualify for a fee waiver.
The Bottom Line
Chapter 7 bankruptcy can be a way out and a relief for most people buried in debt and facing a financial crisis. However, it comes with its set of pros and cons that you must consider before making a move.
If you are still unsure whether this is the right decision for you, consider contacting a legal professional who can answer all of your questions and guide you towards the right path. The law office of Joel Gonzalez has years of experience in Chapter 7 bankruptcy cases and will work tirelessly to help your case, so you can file for bankruptcy relief in TX with us.
Get in touch with our bankruptcy attorney Corpus Christi today for more information!
