If you’re having financial troubles, you may be considering filing for Chapter 7 bankruptcy. Depending on your circumstances, filing for Chapter 7 bankruptcy can either be a great idea or something to avoid. Therefore, before deciding, you should familiarize yourself with the pros and cons of Chapter 7 bankruptcy.
Chapter 7 bankruptcy: the pros
A fresh start: Chapter 7 eliminates most unsecured debts. By erasing most unsecured debts, Chapter 7 bankruptcy gives you a fresh financial start.
You get to keep certain assets: Bankruptcy law allows you to exempt some personal property. This means that, despite filing for bankruptcy, you’ll likely get to certain assets, such as your vehicles and retirement accounts.
No repayment plan: In Chapter 13 bankruptcy, debtors must pay back their debts. In Chapter 7 bankruptcy, however, your debts are eliminated, allowing you to start anew.
You get to keep your tax refund: Depending on the circumstances, you may be able to keep your tax refund after you file for Chapter 7 bankruptcy.
It’s fast: The typical Chapter 7 bankruptcy case takes approximately four months. In addition, after you file for bankruptcy, your creditors can no longer contact you.
Chapter 7 bankruptcy: the cons
Your credit takes a hit: It takes ten years for a Chapter 7 bankruptcy to drop off your credit report. This lowers your credit score and can make it difficult for you to obtain certain types of loans.
Not all debt is forgiven: Certain debts remain even after you file for Chapter 7 bankruptcy. These include debts like alimony, child support, student loans, and taxes.
You may lose your home: If you’re behind on your mortgage payments when you file for Chapter 7 bankruptcy, there’s a good chance that your mortgage company will pursue a foreclosure of your home.
You may not qualify: Not everyone is eligible to file for Chapter 7 bankruptcy. People who have little to no disposable income are the best candidates for Chapter 7 bankruptcy. In order to determine whether you qualify, the court will perform a means test, which is an examination of your income.
You may lose valuable assets: After filing for Chapter 7 bankruptcy, you’ll probably have to liquidate nonexempt personal property to pay off your secured creditors. For example, if you own your home free and clear, the court may decide to sell it to account for secured debt.
Contact a Milwaukee Bankruptcy Lawyer
If you are considering filing for Chapter 7 bankruptcy in Milwaukee, you need an experienced Milwaukee bankruptcy lawyer on your side. At Hanson & Payne, we offer bankruptcy and debt negotiation services for Milwaukee and all of southeast Wisconsin. In addition, our attorneys understand that filing for bankruptcy is a big decision, so we are committed to giving you the information and guidance necessary for you to make an informed decision. Please contact us today to schedule a consultation.