The Advantages and Disadvantages of Filing Chapter 7 Bankruptcy
Filing Chapter 7 may be an option which will relieve you of your debt and help you get the fresh start you need. There are several important advantages of filing Chapter 7 bankruptcy. In fact, Chapter 7 is the most common form of bankruptcy in the United States. An individual or a business may file under Chapter 7 of the U.S. Bankruptcy Code. This process involves the liquidation of assets and the distribution of proceeds from this liquidation to creditors. Following are some of the advantages of Chapter 7: Stops creditor harassment. Stops all debt collection efforts. Postpones foreclosure proceedings, giving you time to figure out an alternative to foreclosure. Successfully completed, discharges all eligible debt. No maximum limit to the amount of debt that can be discharged. No minimum amount of debt that can be discharged. Chapter 7 proceedings take approximately 3 to 6 months to complete, meaning your debt can be discharged in a relatively short amount of time. No monthly payments to the court. While there are many important advantages to filing Chapter 7, there are also some disadvantages that are helpful to fully understand: Chapter 7 will not help you get caught up on past due mortgage or car payments. Your non-exempt property and assets may be at risk of being surrendered to the bankruptcy court and liquidated to pay off creditors. Not all debt is eligible to be discharged (including spousal support, child support, and certain student loans and taxes.) Chapter 7 bankruptcy can only be filed once every 8 years. A Chapter 7 bankruptcy can negatively affect your credit rating and make it difficult to get loans in the immediate future.