Pros & Cons of Chapter 7 Bankruptcy


Bankruptcy is a large topic that can be very confusing. Often times when someone is struggling with debt they tend to think bankruptcy is their only way out.

This is not always the case. While it may be right for some, others may look to avoid bankruptcy. Here are the pros and cons of Chapter 7 Bankruptcy.


  • Discharge Your Debts: People consider Chapter 7 bankruptcy to relieve their debts. Chapter 7 lets you eliminate responsibility to many – but not all – types of debt. There is no minimum on how much you can debt you can discharge.
  • Stop the harassing debt collectors: Upon filing for Chapter 7 bankruptcy, creditors and collection agencies must immediately stop their collection efforts. The process, known as an “automatic stop,” can help stop harassing collectors, stop or avoid wage garnishments, and even pause repossessions and foreclosures. Having legal protection will give you some peace of mind for your case.
  • Chapter 7 can be a quick process: Generally, this type of bankruptcy will not take that long to resolve. Depending on your case, it may only take up to 6 months from the time you file until the time your debts are discharged.
  • You MAY be able to keep some property: Though dependent on your states bankruptcy statute, you may be able to keep some of your property. Property in which you get to keep is “exempt.” Fortunately, if you take the right steps you can keep some property that you’ll need to work and live.


  • Can remain on your credit history for up to 10 years: Not only will your credit score take a dip, Chapter 7 bankruptcy can damage your credit history and tarnish it for up to 10 years. This will make it very difficult to secure a loan, open credit accounts or take out a mortgage. Loans if approved will have very high interest rates and high fees.This can make it difficult to pay off in full and can lead to more debt problems – and you can’t file for Chapter 7 within 8 years of your last filing.
  • Not all your debts will be discharged: There’re limits when it comes to what types of debt you can discharge. While it is possible to discharge student loans, unless you have a real hardship where you won’t be able to work again, it’s very difficult. Most tax debt, child support, alimony and any fines and restitution you owe for breaking the law will most likely not be discharged in Chapter 7, bankruptcy.
  • Bankruptcy is not always cheap: While you may think the fee to file for bankruptcy, the court administration fees, and your attorney fees are worth the price of debt freedom, this is not all you will be giving up. Your personal belongings can be liquidated to help pay off some of the debt. You may be able to keep your home but your accessories and luxury items could be sold. And since you may lose all your credit cards, as mentioned, your new cards can come with higher rates and higher fees.
  • Not everyone qualifies: To become eligible for Chapter 7 bankruptcy, those interested must pass the means test. The means test examines a debtor’s financial records which include their income, expenses, and debts. Some may not qualify if their income is too high and may consider Chapter 13 bankruptcy.

The Verdict?

Everyone’s debt situation is different. What works for one individual, may not work for another. At Tayne Law Group, we view bankruptcy as a last resort in trying to resolve your debt problems. Our debt relief service works with creditors on your behalf to resolve debts for a fraction of the original price. If you’re unsure which route to take, consider giving us a call at 1-866-890-7337 for a FREE phone consultation. If we determine bankruptcy is a better option for you, we will recommend a great bankruptcy attorney.

Share on FacebookShare on Google+Tweet about this on TwitterPin on PinterestShare on LinkedIn

Leave a Reply

Your email address will not be published.

Call Us Now to Get Started

(866) 890-7337

What People Have to Say

I just wanted to thank your entire staff at The Law Offices of Leslie H. Tayne, for helping me get out of debt. If it wasn’t for your firm, I would have never been able to resolve my $13k worth of debt in less than 3 years. Your staff did a great job, I was finally able to buy myself a brand new car without using a cosigner. I can’t tell you again how happy I am. I would recommend your services to anyone.

L.C. Client 2007-2009

I sleep like a baby at night now because of the work that you and your office have done. Rest assured that I will refer anyone I know to your office with conditions that are similarly circumstanced.

R.S. Client 2012-2014

You have been very helpful at first directing me in the right direction when I had no clue how to go about handling everything, I really appreciated all your advice and help and hope we can work something out. Thanks again for all your help and kind words, and patience.

D.M. Client 2009-2012