Advantages Of Chapter 7 Bankruptcy Filing

Chapter 7 bankruptcy accounts for more than half of consumer bankruptcies filed in the U.S. today. Also called a straight or total bankruptcy, it is the only form of bankruptcy that allows the discharge of debt almost immediately after filing. But it’s not just quick relief that draws debtors in distress to file Chapter 7 bankruptcy. While it does have its risks, it offers unique benefits in terms of cost, effort, and recovery. Here are four reasons why Chapter 7 bankruptcy can be a good option, and how you can make the most of it.

Faster Discharge

From filing to discharge, a Chapter 7 bankruptcy typically takes three to five months. This includes the creditors’ meeting, which takes place about a month after your filing, and the 60-day window afterwards during which your creditors can contest the terms of your discharge. By contrast, Chapter 13, the other form of consumer bankruptcy, takes three to five years of monthly repayment before you can be discharged. Chapter 7 allows you to get a fresh start and rebuild your credit score sooner.

More Debt Forgiveness

In a Chapter 7 bankruptcy, you have some of your assets sold off and use the proceeds to pay creditors in order of priority. Unsecured debts that cannot be covered by the proceeds are written off. These are usually credit card debts, which make up most of the debt in a typical consumer bankruptcy. Most debtors only end up paying a small portion of their debt under Chapter 7, making it technically cheaper than other types of bankruptcy.

Court Protection

Perhaps the best reason to file for bankruptcy, under Chapter 7 or Chapter 13, is to get protection from your creditors through the court’s automatic stay. As soon as your case is filed, creditors can no longer collect payments, garnish wages, or proceed with any form of solicitation—including foreclosure. Filing for Chapter 7 bankruptcy will keep creditors at bay while you work out an arrangement and try to get back on track.

Recovery Options

Finally, Chapter 7 bankruptcy clears off your debt so that you can get a fresh start on your finances. Your credit score may suffer, perhaps more than if you filed for Chapter 13, but you have more time to start reestablishing your credit and building an emergency fund. Your bankruptcy attorney
can give you tips on making use of this opportunity and avoiding more bankruptcy filings in the future.




The writer of this article is Wystan North. He has made his mark by writing on legal issues especially on Filing Bankruptcy procedures in different states. The author regularly writes on bankruptcy related issues like Ohio bankruptcy,Chapter 7 Laws, chapter 13 bankruptcy and chapter 7 bankruptcy etc.