Most people never think twice about Chapter 7 bankruptcy until they find themselves facing insurmountable financial circumstances. For example, if you find yourself buried in credit card debt and a variety of loans, it may be the best way to escape.
Whether or not you consider Chapter 7 bankruptcy is based largely on your financial circumstances. If you’re considering it, here are some reasons why it may be a good decision:
- Discharge of many types of debt: Chapter 7 bankruptcy doesn’t eliminate all your debts, such as student loans and back child support, but it can help with most types.
- A fresh start: Once the majority of your debts are discharged, you can breathe again. With a fresh start, you have the opportunity to build the financial life you’ve always wanted, instead of remaining stuck in a bad situation for years to come.
- No repayment plan: You don’t have to repay any of your debts through a repayment plan, such as is the case with Chapter 13 bankruptcy. The money you earn in the future is yours to keep, which gives you a head start in rebuilding your finances.
- It’s fast: Once you decide to file for bankruptcy, the last thing you want is to wait around for something to happen. Chapter 7 bankruptcy is fast, with a discharge of debt typically occurring within 90 days. Also, the process usually comes to a conclusion within six months.
- Availability of state exemptions: With exemptions, there’s a good chance you’ll be able to keep most, if not all, of your property. You may lose some luxury items, should you have any, but the benefits far outweigh this potential risk.
With these benefits, you may find that Chapter 7 bankruptcy is the best way to regain control of your finances. And even though your filing will remain on your credit report for 10 years, you can take immediate steps to reestablish your finances and ensure that you don’t go down the same path again.
Even if you don’t end up filing for Chapter 7 bankruptcy, learning more about the process will help you better understand the pros, cons, and how it would affect your life now and in the future.