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
Other Bankruptcy FAQs:
- Are alimony debts and payments discharged in bankruptcy?
- Are income taxes dischargeable in bankruptcy?
- Are my student loans dischargeable in bankruptcy?
- Can a creditor repossess my car without informing me?
- Can bankruptcy help my credit score?
- Can Chapter 7 bankruptcy save my home from foreclosure?
- Can I convert from a Chapter 13 to a Chapter 7 or from a Chapter 7 to a Chapter 13 in Pennsylvania?
- Can I discharge a federal tax lien?
- Can I file Chapter 7 and still keep my car?
- Can I keep my car after filing Chapter 13?
- Does a Chapter 13 ruin your credit?
- How much does it cost to hire a bankruptcy lawyer in Pennsylvania?
- How often can I file for bankruptcy in Pennsylvania?
- What happens to your car loan when you file Chapter 7?
- What to do if your wages are garnished in Pennsylvania?
- Will filing Chapter 7 hurt my credit?