Due to COVID-19, we will be conducting all consultations via video, phone, or email. We are open and here to help people in these trying times. Please don’t hesitate to call us if you have any questions!
Safeguarding Your Future Benefit From the Experience and Insights of Our Dedicated Bankruptcy Lawyers

Pros & Cons of Filing a Chapter 7 Bankruptcy

If you are experiencing crushing debt and you are now considering filing Chapter 7 bankruptcy, you’ll want to do your research before you make a decision. One aspect of your research should be weighing the pros and cons of filing a Chapter 7. If the pros outweigh the cons, it may be in your best interests to file a Chapter 7, especially if you’ll be on your way to a financial fresh start much faster than if you decided to do nothing. If you feel the disadvantages of a Chapter 7 make it not worth it for you, perhaps you should consider an alternative, such as a Chapter 13 bankruptcy.

Chapter 7: Advantages vs. Disadvantages

With a Chapter 7 bankruptcy, the debtor’s qualifying, unsecured debts are discharged or “wiped out.” If the debtor has non-exempt assets, such as a vacation home, or a boat, they may be liquidated to pay off the debtor’s creditors. However, most Chapter 7s are called “no-asset bankruptcies” because the debtor does not have non-exempt assets to liquidate.

Cons of a Chapter 7 Bankruptcy:

  • Child support, spousal support, court-ordered fines, and victim restitution cannot be included in a Chapter 7 bankruptcy.
  • Unlike a Chapter 13, a debtor’s home cannot be saved from foreclosure.
  • The Chapter 7 remains on the debtor’s credit for 10 years.
  • Credit cards and auto loans will likely come with high interest rates in the first couple years after a bankruptcy.

Pros of Filing a Chapter 7 Bankruptcy:

  • The bankruptcy can discharge all kinds of unsecured debts, including credit card debt, taxes of a certain age, medical debt, and personal loans.
  • Usually, from start to finish the bankruptcy can be wrapped up within six months, giving the debtor a clean slate quickly.
  • As soon as the bankruptcy is discharged, the debtor can start rebuilding their credit.
  • If the debtor works at it, he or she can rebuild their FICO score into the 700s within two or three years after a bankruptcy discharge.
  • Unlike a Chapter 13, where the debtor is placed on a 3 to 5-year repayment plan, everything the debtor earns after filing bankruptcy is theirs to keep.

Next: Chapter 13 Bankruptcy: Why Do It?

Is a Chapter 7 bankruptcy right for you? To explore your options, contact our firm to meet with a York Chapter 7 attorney.