With so many benefits of Chapter 7 bankruptcy, many consumers dive right into the process without first learning more about the potential impact on their life. Rather than make this mistake, it's important to compare the pros and cons to ensure that you know exactly what you're getting.
On the positive side, a Chapter 7 bankruptcy can eliminate some or all of your debt. Furthermore, it's a fast and efficient process, with a discharge likely taking place within three to six months.
Conversely, these are some of the things you need to get on board with if you're going to file for Chapter 7 bankruptcy:
- It will impact your credit score: A Chapter 7 bankruptcy will remain on your credit report for 10 years. This is a long time, especially when you consider the fact that a Chapter 13 bankruptcy only stays on your credit report for seven years. This can make it difficult to secure a loan or credit card in the immediate future.
- You could lose some property: Even though most of your property will be exempt, this doesn't always hold true across the board. It's possible you could lose some possessions, especially those that are considered "luxurious" by the bankruptcy trustee.
- You will lose your credit cards: This shouldn't be that big of a deal, as your credit cards my have led to your trouble in the first place. However, it's something you'll have to get used to after your bankruptcy.
- It doesn't eliminate all your debt: It's a common myth that a Chapter 7 bankruptcy will eliminate or reduce all your debt. It doesn't have any impact on student loans, alimony or child support. You should plan to pay all of these things during and after your bankruptcy.
With these details in mind, you're in better position to compare the pros and cons of Chapter 7 bankruptcy. Most people find that they can live with the potential drawbacks above, as they get so many benefits in return.
If you're ready to file for Chapter 7 bankruptcy, make sure you're 100 percent clear on the pros and cons. From there, learn more about the process and your legal rights as a consumer. You can visit our website for more information on Virginia bankruptcy laws.