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Drawbacks of Chapter 7 bankruptcy

On Behalf of | Jul 22, 2019 | Chapter 7 Bankruptcy

Florida residents who are trapped under a pile of debt may be looking at different bankruptcy options in order to rid themselves of a financial burden. Though many options are available, today we will be taking a look at Chapter 7 bankruptcy.

The United States Courts covers bankruptcy basics, in which matters like Chapter 7 bankruptcy are discussed. It is noted that this type of bankruptcy is particularly valuable to people facing creditor harassment, as well as those who are unable to pay back debts due to a lack of income. It allows for the person’s assets to be liquidated in exchange of forgiving most sources of debt. Because no repayment plans are involved, debt is cleared much faster.

FindLaw also takes a look at Chapter 7 bankruptcy, including the possible flaws. For example, it will remain on a person’s credit score for a longer period of time than Chapter 13 bankruptcy does, potentially impacting their ability to do things like buy cars or houses. Some people don’t want to forfeit their assets, which is unavoidable through this plan. They will not have a say over what gets liquidated and may end up losing valuable items like cars or additional property. Finally, not all debt can be erased through Chapter 7. Some debt, like college tuition, will remain even after assets are liquidated.

Both options have their benefits and drawbacks. It is up to every individual to carefully examine their own situation and both of the involved options and decide from there what they think would be the best fit.

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