Will filing Chapter 7 hurt my credit?

Filing any type of bankruptcy will hurt your credit. However, you can rebuild it into something better for the future.

The advantages of filing Chapter 7 include:

  • Filing Chapter 7 can mean you are debt free within three to six months
  • The bankruptcy remains on your credit file for up to ten years but after you are discharged, you can start to rebuild your credit
  • There are usually enough state exemptions to let you keep most of what you own, plus you keep wages earned and property bought after filing Chapter 7
  • Within one to three years, you may be able to get new lines of credit, with a higher interest rate, as there are lenders willing to deal with those who have declared bankruptcy
  • Even if you can only file Chapter 7 once every six years, you can still file Chapter 13 if need be
  • You are likely to still pay alimony and child support unless a family court order suspends the payments
  • Declaring bankruptcy means your creditors cannot aggressively collect
  • To file Chapter 7 you do not have to have a certain amount of debts to file
  • Follow all the rules and some of the limitations may not apply to you
  • To avoid limiting any future bankruptcy situations, speak to a qualified bankruptcy attorney

The disadvantages of filing a Chapter 7 bankruptcy include:

  • Filing affects your credit rating and may remain on your file for up to ten years
  • You may lose property you own that is not exempt
  • You lose all of your credit cards
  • If you filed Chapter 7, but have disposable income, the court can convert your Chapter 7 to a Chapter 13, meaning you now have to repay all your debts within three to five years and not be debt free within four to six months
  • Getting a mortgage once you have declared bankruptcy can be exceedingly difficult, if not impossible
  • Filing now means you cannot file again for at least six years, so you need to choose the time you file carefully if you are in serious financial trouble
  • You still have to pay alimony and child support
  • You may still need to pay your student loan – there are some exceptions
  • You need to answer all the questions a judge has for you about how you got into a situation where you needed to file for bankruptcy
  • You cannot file Chapter 7 if you went through bankruptcy under Chapter 7 or 13 within the last six years
  • You cannot file Chapter 7 if a prior Chapter 7 or 13 was dismissed within 180 days because you asked for a dismissal when a creditor filed for relief from the automatic stay or if you violated a court order
  • You might still have to pay some debts, like a lien against your mortgage

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