Well, filing for bankruptcy altogether is a very difficult decision to make. Even though it has many advantages, the biggest being freedom from all creditor’s calls and notes, it also comes with a handful of disadvantages like a bad credit score.
Not only does filing for bankruptcy affect your credit score, but it also somehow has a negative impact on your self-image, as well as your reputation. Nonetheless, all this can be improved over a period of time, since there is nothing better than getting rid of all your dues to pave a new road to a better future without any financial drawbacks.
Let’s analyze the pros and cons of filing for bankruptcy under chapter 7
Pros of filing for bankruptcy
- It takes only about 3-6 months to file for bankruptcy under chapter 7 and to get the relief.
- If you consider most state exemptions, most of your property will be exempt from bankruptcy. This means that you will have to get rid of much fewer assets than you had deemed.
- Your salary and wages will not be garnished.
- You can apply for new credit cards within 3 years of filing for bankruptcy.
- There are few lenders in the market, who have expertise in lending money to people after bankruptcy. However, they charge a higher rate of interest as compared to others.
- You can file for bankruptcy under chapter 7 again, 6 years from the last filing date.
- You can get rid of most of your debts except a few like domestic support obligations.
- Automatic stay helps prevent all collection efforts from the creditos.
Cons of filing for bankruptcy under chapter 7
- A bad credit score generally shows on your credit report until 10 years
- You may lose luxury possessions as well as assets that is non-exempted
- You will lose possession of all your credit cards
- It becomes quite difficult to get a new loan or mortgage for a couple of years
- You will have to continue to pay your student loans as well as a domestic support obligation.