I will describe the advantages and disadvantages of pursuing Chapter 7 bankruptcy. Chapter 7 bankruptcy may be preferable to Chapter 13 bankruptcy for the majority of individuals.
When filing for Chapter 7 bankruptcy, you must sell your excess assets to pay off your creditors. Therefore, this would necessitate the sale of any opulent or unprotected items. The positive news is that your most valuable assets are safe. Your home and vehicle, for instance, are exempt from being sold to satisfy your debts. And things could improve for you. If you do not possess a large number of valuable unprotected or luxury items, you could get off relatively easily. The preponderance of your debts with your creditors would be settled. The only exceptions are alimony payments and student loans, neither of which can be discharged through bankruptcy.
Two additional advantages of declaring Chapter 7 bankruptcy are the speedy declaration process (typically completed in six months) and the cessation of all creditor and collection calls after filing.
However, declaring has a few disadvantages. Chapter 7 bankruptcy will remain on your credit report for ten years. This would make obtaining a mortgage more difficult, and almost impossible within two years of declaring bankruptcy. In addition, you cannot file for bankruptcy again for six years. Therefore, after filing for bankruptcy, you must exercise caution to avoid falling into the same situation again, particularly within the first six years after filing.
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