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Understanding secondary factors about a Chapter 7 bankruptcy

| May 4, 2021 | Chapter 7 Bankruptcy

Florida residents who are facing financial challenges that have gotten out of control might analyze whether bankruptcy is right for them. Chapter 7 bankruptcy is generally the easiest way to get out of debt, but it is generally more appropriate for people who have limited assets and are unconcerned about losing property as part of a liquidation to repay creditors. The benefits are clear as it can eliminate unsecured debt and give the debtor a so-called “fresh financial start.” Still, there are other aspects of a filing that should be weighed beforehand.

Credit reports, discrimination and the right time to file

Despite the known positives of Chapter 7 bankruptcy, there are some drawbacks. People who have accrued so much debt will accept these as a necessary trade-off. However, if there are debt solutions that can avoid bankruptcy, it can also prevent these secondary factors. The Fair Credit Reporting Act lets the bankruptcy be listed for 10 years following its filing. Other credit information is limited to seven years. It can be difficult to function without credit and this this is a common fear for people thinking about filing. Even with that, there will be credit offers. They will likely have a higher interest rate and the possibility of annual fees at least until the credit score improves as time passes and debts are paid when they are due.

Discriminating against people who have filed for bankruptcy might sound unusual, but it is a possibility. Fortunately, employers are not allowed to fire someone just because they filed for bankruptcy, nor can they discriminate against prospective employees because of it. Even though these factors are minor when compared to the financial turmoil many debtors experience when they cannot make their payments, there could be preferable alternatives to bankruptcy that warrant assessment before filing.

Comprehensive guidance may help to make an informed decision

These potential issues might not dissuade people who simply want to end the daily worry that often accompanies the harassing phone calls and uncertainty of overwhelming debt, but they should be known. While Chapter 7 bankruptcy can be helpful for many debtors, knowing about all the ancillary parts of a filing and completion of the process is imperative. From the start, consulting with professionals who are experienced with all areas of bankruptcy can provide useful information to determine how to proceed.

 

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