The Pros and Cons of Declaring Chapter 7 Bankruptcy

Diving into bankruptcy is not a good idea. Any Chapter 7 bankruptcy attorney will tell you that there are advantages and disadvantages to declaring Chapter 7 bankruptcy, all of which must be weighed. Check them out here to figure out if it’s the best way for you to restructure your debts or not:


  • The actual process doesn’t take too long, and is usually over with three to six months. That being said, it does stay on your record for years. Your missed debt payments, defaults, and repossessions — not to mention possible lawsuits — will also hurt your credit score.
  • Most states have exemptions in place that prevent important possessions from being liquidated, and sometimes they even allow you to keep more of your property than you need. You will be able to keep your salary and the things you purchase after you file Chapter 7 bankruptcy.
  • The sooner you get debt assistance, the sooner you can start rebuilding your credit and entire life. Use the required financial counseling to your advantage and use bankruptcy as an opportunity to start budgeting, saving, and refraining from taking out loans.


  • Bankruptcy of any kind can ruin your credit for a long while to come. A Chapter 7 bankruptcy stays on your credit report for 10 years after it is arranged.
  • You will lose all of your credit cards, and also any property that was not exempt from sale by the bankruptcy trustee, plus any other luxury items that weren’t exempt.
  • Declaring bankruptcy now may make it harder to declare later if you are in a more dire situation. That’s why you should make sure that it’s absolutely necessary. If you file Chapter 7, you cannot file again under that chapter for another six years.
  • Chapter 7 (or Chapter 11 or Chapter 13 bankruptcy) will never exempt you from child support payments, alimony, or student loan payments.

The fee for filing bankruptcy under Chapter 7 in the U.S. is currently $306 — which could be excessive if you truly have no money, but is also relatively cheap as far as loan forgiveness and debt alleviation go. Consult your Chapter 7 bankruptcy attorney for how best to go about filing for bankruptcy.