To understand how debt & chapter 7 bankruptcy works we need to know a few things. What is a Chapter 7 bankruptcy? In a Chapter 7 bankruptcy you are asking the court to completely eliminate all of your unsecured debt.
What are the advantages of filing a Chapter 7 bankruptcy?
If you elect to hire an attorney, take the required classes on personal finances and file for a Chapter 7 bankruptcy:
- Your wages will stop being garnished, if your creditors have started doing so.
- You may be able to remove some of the liens that have been placed against your property.
- All collections from creditors or collection agencies will cease.
What are the disadvantages of filing a Chapter 7 bankruptcy?
The biggest disadvantage of filing for Chapter 7 bankruptcy is the stain on your credit report for the next ten (10) years. Anything you do over that time period, such as applying for a job, applying for credit again, or buying a home will require to you to bring up the wreckage of your past. You will have to explain to each employer and/or new creditor why you had to do this. It can be very depressing and demoralizing. Other disadvantages include:
- Insurance companies have the right to raise your premiums as you will be considered a “higher risk” than other people.
- The entire bankruptcy process is open to the public and can be very intrusive.
- It can take several months before your case is even resolved.
- In 2005 the bankruptcy laws were changed in favor of the credit card companies making it more difficult to file for Chapter 7 bankruptcy.
- Employers can legally refuse to hire you if you have a bankruptcy on your record.
- The stigma of a bankruptcy on your credit report for 10 years can be overpowering.
If you would like to speak to one of our professional advisors regarding bankruptcy, or better yet a debt settlement program whereby you do not have to file for bankruptcy please give us a call toll free at 1-800-890-6658 between the hours of 8:00 am and 5:00 pm PST. Or you may click here to be sent directly to our web site.