Before you file for a Chapter 7 bankruptcy, you should know about its advantages and disadvantages. will help you discover these.

What are the advantages of Chapter 7 bankruptcy?

There are several advantages of Chapter 7 bankruptcy. These are:

If you file for a Chapter 7 bankruptcy, it provides a way to eliminate most of your unsecured debts such as medical bills and credit card debts and some of your secured debts too.

You will be generally receiving a bankruptcy discharge within 4 months of filing for a Chapter 7 bankruptcy.

If the new bankruptcy laws are complied with, then you aren’t required to offer a monthly repayment to your creditors. This is especially beneficial if you are currently unemployed or have minimal disposable income.

After you file a Chapter 7 bankruptcy, it is not legal for creditors or debt collection agencies to contact you. This is known as the order of automatic stay. This protection will start from the moment you file a petition in the court. The only time the creditor can contact you is when he is reaffirming a debt that is to be repaid separately such as car loan or mortgage.

A prerequisite to filing a bankruptcy is that you must get a bankruptcy credit counseling from any firm that is approved by the United States Trustee’s office. This will help you to manage your finances better in future.

What are the disadvantages of filing Chapter 7 bankruptcy?

There are certain disadvantages that Chapter 7 has too. These are as follows:

If you file a bankruptcy your credit score falls drastically. This will remain on your credit report for the next 10 years and will be visible to anybody who does your credit evaluation.

There are a number of debts that you have to pay separately such as secured loans, alimony, child support, federal taxes, and student loans and so on.

In most cases the process of bankruptcy can be confusing hence you would require legal assistance. The fees for a bankruptcy attorney range between a thousand to two thousand dollars.

You can declare a personal bankruptcy only after 8 years from the previous one.

You would be required to hand over any non-exempt asset that you have to the bankruptcy Trustee. These will be liquidated to pay the creditors on a pro rata basis.

Thus you now know the pros and cons before filing Chapter 7 bankruptcy.