Are you considering filing
Chapter 7 bankruptcy? If so, you’re probably wondering, “What are the
effects of Chapter 7 bankruptcy? Will it ruin my credit? Will I have to
give up the few assets that I do have?” The effects of a Chapter
7 depend on different factors, such as the types of debts and assets in question.
Chapter 13, Chapter 7 bankruptcy does not take 3 to 5 years to conclude. Instead,
it’s rather straightforward and can be completed within months.
Chapter 7 is known as the “liquidation bankruptcy” because
some debtors have to liquidate their assets in order to pay their debts.
If they don’t have enough assets to pay all of their debts, usually
the remaining debts are cancelled. Meaning, the debtor no longer has to pay them.
If the idea of selling your car or your wedding rings terrifies you, don’t
fret. Most Chapter 7 bankruptcies are in fact “no-asset” bankruptcies
and the debtors don’t have to liquidate any of their assets. In
many Chapter 7 cases, the debtor’s assets are exempt or otherwise
protected from liquidation. However, if you have a boat, a few extra cars,
or a second home, the bankruptcy trustee may require that you sell those
unnecessary items to pay off your debts.
Are All Debts Dischargeable in a Chapter 7?
With a Chapter 7, debtors can discharge or wipe out many types of unsecured
debts, such as medical debt, credit card debt, personal loans, and old
utility bills. However, not all debt can be included in a Chapter 7. Child
support, alimony, court-ordered fines, student loans and victim restitution
cannot be discharged in a Chapter 7.
“What are the negative effects of filing Chapter 7 bankruptcy?”
credit score can drop by as much as 100 points and bankruptcy is reported on
your credit for 10 years. But unbeknownst to many debtors, it is possible
to rebuild one’s FICO score into the 700s within two or three years
of filing bankruptcy if the debtor is smart and rebuilds their credit wisely.
Would it be worth it for you to file Chapter 7 or even Chapter 13 bankruptcy?
To find out,
contact our firm to meet with a Harrisburg bankruptcy attorney for free.