Deciding to file for bankruptcy is not an easy decision. It’s even more difficult when the stress level escalates every day with more nasty calls from creditors. It may be helpful to examine the pros and cons of chapter 7 bankruptcy.
Pros of Chapter 7
1. Chapter 7 is Quick
Chapter 7 can be completed in six months or less. A debt repayment program takes several years.
2. Many Assets Are Exempt
When a bankruptcy has been structured correctly, debtors retain most of their assets, including tools needed for work.
3. A Good Credit Rating Can be Built
A bankruptcy will be on the credit report for ten years, but paying bills on time will gradually rebuild a damaged credit rating.
4. Payments do not Need to be Made
Filing bankruptcy puts an automatic stay on payments due to creditors, unless the debt cannot be discharged in bankruptcy (such as child support or college loans). This makes life easier immediately.
5. All Collection Efforts Must Stop
Creditors cannot make phone calls, send letters or proceed with any other collection effort after the bankruptcy has been filed.
Cons of Chapter 7
1. Some Assets May be Liquidated
Everyone’s situation is unique and Georgia’s exemptions will not cover everything. An experienced bankruptcy attorney will know the best way to proceed in order to keep as much as possible.
2. A Bankruptcy on the Credit Report Always Needs Explaining
Future employers or landlords will probably run credit reports and ask about the bankruptcy.
3. Interest Rates will be Higher
After a bankruptcy, until a record of paying bills on time has been established, any credit that is obtained will be at a higher interest rate and the amounts borrowed will be lower.
4. Chapter 7 Could Be Converted to Chapter 13
The courts could decide to convert a quick chapter 7 liquidation bankruptcy to a chapter 13 repayment plan, which will last for three to five years. This is more likely to happen if someone who is unfamiliar with bankruptcy law has structured the bankruptcy.
5. Not All Debt Can Be Liquidated
Some debts will still need to be repaid, including child support, alimony, student loans and certain taxes.
For professional legal assistance with bankruptcy, contact a bankruptcy attorney at Chris Carouthers & Associates. They know how to protect your property and possessions. Visit Chriscarouthers.com to request a free consultation.
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