Deciding whether to file for Chapter 7 bankruptcy can be a difficult decision. Chapter 7 bankruptcy is a type of bankruptcy that enables individuals and businesses to eliminate certain unsecured debt. Although Chapter 7 bankruptcy can provide necessary debt relief, it can also negatively affect your credit, your self-image, and your reputation. Consider the following list of pros and cons when determining whether Chapter 7 bankruptcy in Memphis is right for you.
Cons
Filing for bankruptcy is a serious decision that comes with severe financial consequences. The following are some of the most common negative consequences associated with Chapter 7 bankruptcy:
Ruins credit: Chapter 7 bankruptcy will remain on your credit report for up to 10 years and can seriously affect your ability to obtain any type of credit, including a mortgage.
Lose property: Chapter 7 bankruptcy is commonly referred to as -liquidation bankruptcy- because it requires debtors to sell nonessential property and luxury possessions in order to pay creditors. Lose credit cards: Declaring Chapter 7 bankruptcy will cause the debtor to lose all current credit cards.
Non-qualifying debt: Unfortunately, Chapter 7 bankruptcy does not discharge all types of debt. Student loans, mortgage liens, and alimony and child support payments do not qualify as dischargeable debts under bankruptcy law. Debtors will still be held responsible for all non-qualifying debts after filing for Chapter 7 bankruptcy.
Filing limits: All chapters of bankruptcy have filing limits to help prevent abuse of the law. Individuals cannot file for Chapter 7 bankruptcy if they have completed the process for Chapter 7 or Chapter 13 bankruptcy within the last 6 years.
Pros
Filing for Chapter 7 bankruptcy provides numerous benefits for individuals overwhelmed with serious debt. The following are some of the most common benefits associated with Chapter 7 bankruptcy:
Quick debt relief: Although a bankruptcy filing stays on your record for several years, it is the quickest way to obtain freedom from overwhelming consumer debt. From filing to relief, Chapter 7 bankruptcy only takes about 3 to 6 months. Failing to file for Chapter 7 bankruptcy may result in additional missed payments, defaults, repossessions, and lawsuits that can further injure your credit and financial future.
Stops debt collection: Filing for Chapter 7 bankruptcy effectively stops all debt collection, harassing phone calls from creditors, wage garnishments, repossessions, and restores any utility services that have been cut off.
Property exemptions: States provide exemptions that allow the debtor to keep a specific amount of property after filing for Chapter 7 bankruptcy. These exemptions typically allow the debtor to keep most essential property items and all wages and property acquired after filing for bankruptcy.
Secured credit cards: Although individuals that have filed for bankruptcy may not be eligible for a traditional credit card, they can obtain a secured credit card. These cards require a refundable security deposit to be submitted prior to use, but work exactly like a standard credit card. Payments on secured cards are reported to the 3 major credit bureaus, allowing the cardholders to improve their credit score as they make on-time payments.
Fresh start: Chapter 7 bankruptcy offers a fresh financial start for individuals that are overwhelmed with consumer debt. Declaring bankruptcy also provides that debtor with useful financial instruction, peace of mind, a clean financial slate, and the opportunity to rebuild your credit.
Is Chapter 7 Bankruptcy Right for You?
Because everyone’s financial situation is different, it is important to consult an experienced bankruptcy attorney when considering Chapter 7 bankruptcy in Memphis. Bankruptcy attorneys are considered experts in the field of bankruptcy law and can evaluate your financial situation to determine if bankruptcy is the right option for your individual needs.
Hurst Law Firm, P.A. Hurst Law Firm in Memphis TN can help you when it comes to dealing with chapter 7 bankruptcy. Contact us today to get the help you need! Visit our page on to see our page today!