Chapter 7 Bankruptcy Lawyer
As one of the most powerful relief options out there, Chapter 7 bankruptcy has changed the lives of thousands upon thousands of people. When life gets tough and we face serious financial hardship, it can be a relief to know that there is a way to get a restart. But before jumping to file for bankruptcy, it’s important to have realistic expectations of what that will look like in everyday form. For example, filing for bankruptcy may cause someone’s debts to be eradicated, but perhaps not all. Or for others, they may prefer to not sell off property to pay debts and instead agree to a more affordable repayment plan based on their income.
It’s important to consult with a legal professional who understands bankruptcy law before proceeding further, to make sure the most suitable chapter is filed for and that it’s actually going to make a positive difference in that person’s financial life. For Chapter 7 specifically, here are the benefits and potential drawbacks to consider before filing:
An Automatic Stay Protects You
The moment that you file your bankruptcy case with the court, you are protected from creditors under an automatic stay. This means that your creditors must halt all collection efforts and actions against you immediately, including phone calls, letters, and garnishments. Part of the benefit of filing for bankruptcy is that you get temporary relief from foreclosures, evictions, and repossessions until you have had a chance to reassess your finances.
Most Debts Will Be Discharged
By filing for Chapter 7 bankruptcy, most of your debts will be eradicated, including medical bills, credit card debts, and personal loans. When the court grants you a bankruptcy discharge, your obligation to pay off these kinds of unsecured debt is dropped. But there are some debts that won’t be discharged, such as student loans and overdue taxes.
You Can Keep Most Assets
Most people who file for Chapter 7 get to keep all of their assets, property, and other belongings. By law, you are protected from certain property being taken away from you. Examples of assets protected are household clothing and goods, retirement accounts, vehicles, houses, jewelry, money, and more.
Your Credit Will Go Down Temporarily
In exchange for the benefits of Chapter 7 bankruptcy, one drawback will be that your credit report will have a bankruptcy mark on it for ten years. Your credit score will take a hit, and the higher it is now the more drastic this change will be, but in the long run it may be worth the temporary score setback.
Your Co-Signers May Not Get Relief
Keep in mind that a bankruptcy filing may only eliminate your obligation to pay back the debts, but it does not remove this responsibility for others. There are bankruptcy chapters that may be able to protect a co-signer, but you should consider how this filing may affect those in your life that you share a business or debts with.
Our chapter 7 bankruptcy lawyer can also attest to the fact that filing for bankruptcy can make someone’s life better and take away debts that cause a burden of stress. However, to get the benefits you are hoping for, you must consider the potential pitfalls as well.