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.