The very word evokes strong feelings in most people. Though rarely
anyone's first choice when trying to cope with overwhelming debt,
the decision to file should be made only when fully aware of all
are some facts to consider about chapter 7 bankruptcy:
bankruptcy can be expensive: Court costs and attorney's
fees add up, and are non-dischargeable. Depending on your situation,
this is money that potentially could be spent bringing past-due
accounts current, or making payment arrangements.
may lose property: If your assets are worth more than
state and federal exemption guidelines, they will be liquidated
and the proceeds divided up among your creditors. This can include
your home, car, heirlooms, and jewelry.
doesn't solve spending problems: Bankruptcy won't be
much use if you spend more than you make. Because credit is available
even after discharge (usually with astronomical interest rates),
many people quickly descend into debt again.
everything can be discharged: You can only walk away
from such unsecured debts as credit cards and signature loans.
So if a good portion of what you owe consists of student loans,
tax debt, legal fees, or back child support, bankruptcy won't
will stay on your credit report for ten years: That's
a daunting time frame for most people. The damage to your credit
report can prevent you from renting an apartment, buying a home
or car, or even acquiring life insurance. And many employers are
now pulling credit reports to determine a candidate's responsibility
and stability, so even your future job may be at stake.