Why Chapter 7 Is Not As Scary As It Seems

Posted on: 28 January 2021


Filing for Chapter 7 bankruptcy can be terrifying for some debtors. You might feel that filing for Chapter 7 is a sign of failure, and you might also be worried that the consequences of Chapter 7 can be worse than the benefits. However, there are many ways that Chapter 7 bankruptcy can not be as bad as you think with the help of an experienced attorney.

You Will Receive an Automatic Stay

You may be tired of the harassment you receive from debt collectors who will try to reach out to you through all legal methods of contact. However, when you file for Chapter 7 bankruptcy, your creditors will no longer be able to contact you. If you are contacted by a creditor, contact your attorney.

If You Don't Have Many Assets You Have Nothing to Lose

If you do not have that many assets, you will be able to discharge your debts while losing very little if anything. The courts will often argue that it's not even worthwhile to liquidate the few assets you have. Many assets are exempt, such as assets that are collateral for a secure debt and your home. 

However, you must never hide assets, and you must be careful when gifting assets to someone when you are considering filing for bankruptcy. If you are accused of hiding assets, always bring this up with your attorney so you do not risk having your bankruptcy thrown out. However, in many cases, the courts will simply request that you make any necessary corrections to your filings.

You May Be Considered More Credit-Worthy

By having discharged your debts, you are more likely to be seen as someone who can be trusted with a loan. This is because your debt-to-income ratio will be lower as a result of your bankruptcy. While having a bankruptcy on your record can have an impact on your credit score, an attorney and a credit counselor can help you understand whether a bankruptcy will help or hurt you.

Legal Representatives are There to Help

Legal professionals will be able to guide you through the process of Chapter 7 bankruptcy and help you determine if it's the right option for you. In some cases, Chapter 13 bankruptcy might be a better option. An attorney will help you make sure that you provide the courts with all necessary information and will also make sure that you understand any legal jargon.