What are the disadvantages of Chapter 7? 3 Answers as of September 20, 2010

I have about $40,000 worth of credit card debt. The creditors are on my back and I need to do something about it. Chapter 7 is probably the best option at this point. What are some of the disadvantages to doing so? I know that my credit will be affected for quite a while.

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Greifendorff Law Offices, PC
Greifendorff Law Offices, PC | Christine Wilton
The truth is that your credit has already been negatively impacted by not paying your debts. In most cases, consumer credit scores actually increase after bankruptcy because your debts are cleared from your credit report. Also, the credit card companies like to extend credit to those who have filed bankruptcy because they know you cannot file bankruptcy again for another 8 years and that's the bad news, or disadvantage. I hope this answers your question.
Answer Applies to: California
Replied: 9/20/2010
Ariano & Reppucci
Ariano & Reppucci | Chris Ariano
There are a lot of pros and cons to weigh when considering bankruptcy. Obviously, filing for chapter 7 protection is the easiest way to eliminate most debts and stop creditor harassment - things it sounds like would be a benefit to you.

However, there are some downfalls. I believe to biggest to be the following. The hit to your credit score (which if you are already behind on payments may not be as big as you think). Remember that this may make it more difficult to secure credit after filing.

Also, chapter 7 bankruptcy requires that you turn over non-exempt property to the bankruptcy estate. That being said, Arizona uses relatively high exemption values, so many people filing do not end up turning over anything at all.

Please feel free to contact me with any additional questions.
Answer Applies to: Arizona
Replied: 9/18/2010
The Law Office of Mark J. Markus
The Law Office of Mark J. Markus | Mark Markus
Chapter 7 will be on your credit report for 10 years, but if you are delinquent on your debts, get judgments against you, etc., that's going to adversely affect your credit as well. The main disadvantage of filing a Chapter 7 is that once done, you cannot file another one for 8 years, so if something unforeseen comes up (like medical expenses, etc.), you'd be out of luck (except for possibly being able to do a Chapter 13 case after 4 years). Also, some employers "frown" on someone having filed bankruptcy, but if you can prove that, you can sue them for discrimination under 11 U.S.C. 525.
Answer Applies to: California
Replied: 9/17/2010
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