Chapter 7 Bankruptcy | Advantages and Disadvantages
Chapter 7 Bankruptcy . The average layman is not familiar with bankruptcy terms and often may not understand every purpose for filing for bankruptcy protection. Since filing bankruptcy helps debtors to start a financially fresh new life, bankruptcy laws have been written in an attempt to meet any financially bankrupt situation a debtor may find themselves. There are many types of bankruptcies a debtor can file, and each type has its own advantages and disadvantages for filing them. This article is about the advantages and disadvantages for filing a chapter 7 bankruptcy.
A chapter 7, often called the liquidation bankruptcy, is a type of bankruptcy found in Title 11 of the Bankruptcy Code. It is a form of liquidation where a bankruptcy trustee takes what non-exempt, unencumbered assets an owner has and sells the assets in order to pay off claimed, unsecured debt in a prioritized process.
One of the primary purposes of filing a chapter 7 bankruptcy is to discharge certain debts to give an honest individual debtor a “fresh start.” The debtor has no liability for discharged debts. All non-exempt debts not paid in full during the payment process will be discharged at the end of the bankruptcy process. If a filing debtor does not have any qualifying assets to liquidate, the case is considered to be a no-asset case, and all the qualifying non-exempt debts will be discharged from the responsibility of the debtor.
Here are some advantages and disadvantages for filing a chapter 7 bankruptcy:
Advantages for Filing a Chapter 7 Bankruptcy
It is the simplest and quickest type of bankruptcy to file;
You can protect exempt assets from creditors;
You can immediately stop collections activities which includes all harassment, correspondence, lawsuits, foreclosures, levies,
You can have all qualifying unsecured debt discharged
You may be able to redeem certain assets that are exempt or abandoned;
You get a fresh start faster which enables you to begin building credit quicker.
Disadvantages for Filing a Chapter 7 Bankruptcy
Since you must be able to pass the means test in order to qualify to file a chapter 7, the means test becomes a disadvantage for those who cannot pass it and still want to file;
You may not necessarily be able to keep all of your assets when filing a chapter 7 because some of your assets may be liquidated, and the proceeds will be used to pay unsecured creditors and bankruptcy fees.
You do not necessarily stop a foreclosure or repossession of your secured assets permanently because these processes, under certain circumstances, can begin again when the bankruptcy closes.
Certain qualifying assets may be exempt from bankruptcy discharge in a chapter 7 filing;
In most cases, a debtor may receive a chapter 7 discharge only once in eight years;
and you can lose your credit rating for up to 10 years.
Call attorney David Pinkston, bankruptcy attorney, for a free consultation today: (904) 389-5880. If you are thinking about #bankruptcy, #chapter13bankruptcy or #foreclosure in the Jacksonville, Florida area, you should call attorney David Pinkston. David is very experienced with all aspects of bankruptcy law yet very personable and easy to talk to. Call Us Today! (904) 389-5880