Filing for bankruptcy has always been viewed as a disgraceful thing. People can make smearing remarks about you being bankrupt, but should it deter you from filing a Chapter 7 bankruptcy? No, filing for bankruptcy has upsides and shortcomings. Consult a Chapter 7 bankruptcy lawyer to understand the repercussions and Chapter 7 bankruptcy law.
Here are ways that Chapter 7 bankruptcy can be great for you.
1. Most Debts Are Erased
Once you file for Chapter 7 bankruptcy and it's granted, you will be somewhat debt-free. Not all debts are erased, as detailed in the next section. Bankruptcy will alleviate some of your financial obligations.
However, Chapter 7 bankruptcy isn't an excuse to attempt to cheat the process by hiding assets. Chapter 7 bankruptcy has helped many get out of difficult financial positions. Consult an experienced Chapter 7 bankruptcy lawyer if you need this kind of relief.
2. State Exemptions Will Allow You to Retain Most of Your Possessions
Filing for bankruptcy means that you will lose your possessions to pay the debt. Fortunately, thanks to state exemptions, you won't lose everything. For example, in Texas, state exemptions extend to motor vehicles, personal property, retirement accounts, and home equity.
There is even a wildcard exemption that might help you retain cash or a flashy new car. To ensure that you retain as many possessions as possible, understand your state's Chapter 7 bankruptcy law.
3. You Can Obtain New Credit Cards
Filing for Chapter 7 bankruptcy means losing your current credit cards. This will also affect your current credit rating. Interestingly, you will get easy access to loans and credit cards.
Once you file for Chapter bankruptcy 7, you're considered a low credit risk. This is because there is an 8-year wait before you can file for another Chapter 7 bankruptcy. Also, since most of your debts are erased, you will have fewer monthly debt obligations. You will be viewed as a prime loan candidate, but you will pay higher interest rates.
Shortcomings of Chapter 7 Bankruptcy
Below are a few disadvantages of Chapter 7 Bankruptcy.
1. It Doesn't Erase All Your Debts
Ask your Chapter 7 bankruptcy lawyer, and they will tell you it doesn't erase all your debts. Some debts are erased and others are 'spared'. Read the Chapter 7 bankruptcy law to understand dischargeable and non-dischargeable debts. Examples of non-dischargeable debts include taxes, student loans, and unpaid child support.
2. You Will Lose Luxury Possessions
You can't claim to be bankrupt and still own high-end vehicles, yachts, and other luxury possessions. The state law will determine which possessions are exempt from liquidation. However, working with a Chapter 7 bankruptcy lawyer will ensure that you capitalize on all exemptions that you're entitled to.
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