The Pros and Cons of Bankruptcy

Pros and Cons of Bankruptcy

There are many pros and cons of declaring bankruptcy. Get advice from a bankruptcy lawyer for more information about whether or not bankruptcy is right for you.

Chapter 7 Pros and Cons of Bankruptcy

Advantages of Chapter 7

  • Qualifying debts can generally be discharged within 3 to 6 months.
  • Bankruptcy laws may allow you to keep property that is exempt under bankruptcy law.
  • Creditors may be stopped from harassing actions after you file your bankruptcy petition.
  • Foreclosures can be stopped, at least for a short period of time, allowing you to potentially catch up on your mortgage payments.

Disadvantages of Chapter 7

  • Non-exempt property can be sold to repay your creditors.
  • Not all debts will be discharged. For instance, assuming you retain your property, you would be responsible for making your mortgage payments.
  • Filing bankruptcy will reduce your credit score.
  • Not all debts are discharged.
  • Not all debtors will qualify to file Chapter 7 Bankruptcy.

Chapter 13 Pros and Cons of Bankruptcy

Advantages of Chapter 13

  • You may have the ability to retain exempt and non-exempt property.
  • Debts can be reorganized and repaid over 3 or 5 years.
  • Creditors are barred from continuing harassing creditor actions.
  • Foreclosure and wage garnishments can be halted.
  • Co-signors can be protected.

Disadvantages of Chapter 13

  • Your cash may be tied up to pay for your bankruptcy expenses.
  • Higher cost to hire a bankruptcy lawyer.
  • Your debt must be under $1,000,000
  • Unsecured debts are not immediately discharged but must be paid over an extended period of time.

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