Filing for Chapter 7 bankruptcy can prove to be a good option when an individual feels overwhelmed in debt and not able to repay all of them. Although it is a tough decision to take and the entire process is time consuming but it seems the only right choice in that bad financial phase.
Filing for Chapter 7 will help to get some relief: –
If you are thinking the same way then you are not completely wrong. When your debts start affecting your personal life like your relationships, ability to sleep, then you feel that declaring bankruptcy is the only option you are left with. You will be able to get rid of most of your debts and can start afresh.
This thing has a different side as well: –
Now, it is time to flip the coin and see the darker side of going bankrupt. If you file for bankruptcy then it destroys our credit score completely. You will have to start again to build a new credit score. And you will not be eligible for a new credit for a specific time period.
Things that should be taken care of before filing for Chapter 7 bankruptcy: –
- You will have to check the eligibility criteria of Chapter 7 in your state and make sure that you are eligible to file one. It depends on many factors like median income of the state and selection of right bankruptcy court.
- Once you file the official petition, your financial affairs are not personal anymore. The bankruptcy court has strong power to interfere in your financial matters.
- You are agreeing to a condition that the chapter 7 bankruptcy trustee can sell all of your non-exempt assets.
- A few states give the option to choose between state exemption laws and federal exemption law. It is better to check whether your state is giving that choice or not. And if yes, then you should compare both sets of exemption laws and choose the right one according to you.
- It is not an instant process and most importantly, it cannot get rid of all of your debts. A few debts are non-dischargeable.
- A bankruptcy attorney plays an important role in the entire process. Choosing a right lawyer is the most important thing. You should not hide any detail related to your finance from your bankruptcy attorney.
- You cannot treat your friends or family members differently when it comes to repay the debt.
- Even after getting your debts discharged, the bankruptcy trustee and creditors have a 2 months period to challenge your right of discharge.
- It takes almost 4-6 months after filing to get your debts discharged.