See Both the Sides of a Coin: Chapter 7 Bankruptcy

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Filing for bankruptcy under Chapter 7 can prove to be a good option when an individual feels overwhelmed with debts and unable to pay them all off. While this is a tough decision to make and the whole process takes time, it seems like the only right choice in this bad financial phase.

Chapter 7 filing will help to get some relief: –

If you think the same way, you aren't completely wrong. When your debts start to affect your personal life like your relationships, your ability to sleep, then you feel that declaring bankruptcy is the only option left for you. You can get rid of most of your debt and start over.

This thing also has a different side: –

Now it's time to flip the coin and see the darker side of bankruptcy. If you file for bankruptcy, it completely destroys our credit score. You will need to start over to establish a new credit score. And you won't be eligible for new credit for a certain period of time.

Things to consider before filing for bankruptcy under Chapter 7: –

  • You will need to check the Chapter 7 eligibility criteria in your state and make sure you are eligible to file one. It depends on many factors like median state income and choice of bankruptcy law court.

  • Once you file the official petition, your financial affairs are no longer personal. The bankruptcy court has a strong power to interfere in your financial affairs.

  • You agree 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 best to check whether your state gives this choice or not. And if so, you need to compare the two sets of exemption laws and choose the right one for you.

  • It is not an instant process and most importantly it cannot get rid of all your debts. Some debts are not dischargeable.

  • A bankruptcy lawyer plays an important role in the whole process. The most important thing is to choose the right lawyer. You should not hide any details related to your finances from your bankruptcy lawyer.

  • You can't treat your friends or family any differently when it comes to paying off debt.

  • Even after paying off your debts, the bankruptcy trustee and creditors have 2 months to challenge your discharge right.

  • It takes almost 4-6 months after filing for your debts to be paid.


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