Filing for Chapter 7 bankruptcy can be a significant undertaking, and it can be an intimidating opportunity as a result. Whether filing for debt relief is worth the effort depends on each individual’s financial situation.
If you are thinking about filing for Chapter 7 bankruptcy, you’ll want to carefully consider both the pros and cons of doing so, as they relate to your unique circumstances. There isn’t a “one-size-fits-all” answer to the question “Should I file for bankruptcy?”. The answer to that question is unique to each individual’s situation.
Potential benefits of filing for Chapter 7 bankruptcy
The primary reason that most filers ultimately choose to pursue Chapter 7 bankruptcy is the discharge of their eligible unsecured debts, including credit card bills, medical accounts and personal loans. This end result can provide a fresh financial start for filers, relieving them of many different kinds of overwhelming debt burdens.
It is additionally helpful to know that the Chapter 7 process is relatively quick, often completed within three to six months. This reality can provide rapid relief from creditor harassment and financial stress. But relief does not only occur when a case is complete. Upon filing for Chapter 7, an automatic stay is put in place. This means that most creditors must stop all collection activities, including lawsuits, wage garnishments and demands for repayment. This immediate relief can offer peace of mind and stability.
Finally, unlike Chapter 13 bankruptcy, which requires a repayment plan, Chapter 7 does not involve making payments to creditors over time. This can be beneficial for individuals with little to no disposable income.
With all of this said, there are some potential disadvantages to filing for Chapter 7 bankruptcy. For example, your credit score will drop and you may risk the sale of any non-exempt assets that you own. As such, it’s important to carefully weigh the potential benefits of this opportunity against its risks before committing to any particular approach to your debt-related circumstances.
