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Chapter 7 bankruptcy might seem very attractive because of the discharge it promises. But there are obviously some aspects that need to be revisited or thought about before considering chapter 7. These can help in making a sound decision with respect to bankruptcy choices. Learn more about bankruptcy overall by logging on to https://www.recoverylawgroup.com/bankruptcy/.
Flaws of chapter 7 bankruptcy
- Liquidation of assets
If the filer has more assets and all of them or most of them are nonexempt, chapter 7 can prove disastrous. The filer might end up with very few assets post-bankruptcy. There are certain options to redeem or to reaffirm the asset however, it is very difficult for a filer to reaffirm a debt from that scenario.
- Impact on credit score
The credit score of an individual takes a bigger hit with chapter 7 as the discharge can be higher and the quantum of debt cleared is very low. The impact on credit score is a little more balanced with respect to Chapter 13 and hence, it is often said that chapter 7 is not that great for your credit health. Another important aspect is that the scars of chapter 7 bankruptcy tend to remain on the report for a period of 10 years. Conscious efforts of rebuilding credit scores can help but it will take significant effort to do so.
- Ability to claim bankruptcy discharge
There is a seasoning period to avail of the second bankruptcy discharge. If a chapter 7 bankruptcy discharge is obtained, it limits the filer to avail of the next discharge for a period of 4 years. This can be lower in the case of chapter 13, which is 2 years from the date of discharge.
Depending on the status of the bankruptcy filer, the flaws can be ignored or revisited to reconsider the decision of filing for Chapter 7 bankruptcy. Consulting an attorney is an excellent option especially when you have aspects like means test qualification, use of exempt asset codes to safeguard assets, etc. With regulated fees and protection against unreasonable fees from the bankruptcy court, do not hesitate to dial 888-297-6203 to connect with the best attorneys from Los Angeles & Dallas, TX.