The Ups and Downs of Filing for Chapter 7 Bankruptcy

The Pros:  

Cease Getting Pestered 

One of the most significant effects of filing for Chapter 7 Bankruptcy in Panama City Beach, FL is “automatic stay.” This means that bill collectors will cease contacting you as soon as the bankruptcy court receives your paperwork. In fact, after you have filed for bankruptcy, any debt collectors that still choose to bother you can be penalized by the court.  

Say Goodbye to Debts 

Filing for Chapter 7 Bankruptcy rids you of practically all of your debt, including credit card debt, medical bill debt, personal loan debt, and cell phone debt. (Keep in mind, however, that some debts will not be forgiven upon filing. Some of these include student loans debt, certain tax obligations, and child support.) 

See a Credit Score Improvement 

If your credit score is low before filing for bankruptcy, you will enjoy having a clean slate, enabling you to work on rebuilding your credit score.  

No More Wage Garnishment 

Wage garnishment is a term describing the situation in which there is a court judgment that forces a portion of your paycheck to go directly to your creditors to satisfy a debt. When you file for Chapter 7 Bankruptcy, wage garnishment is a thing of the past. 

The Not-So-Pros:  

Have a Good Credit Score? It’ll Likely Decrease  

If you do happen to have a high credit score before filing for bankruptcy, then you will probably end up with a lower credit score after filing. More often than not, however, those considering filing for Chapter 7 Bankruptcy have a poor credit score to start with, and they do see an improvement after filing. 

You’ll Welcome an Unfavorable Record to Your Credit Report 

Your credit report will show that you filed for bankruptcy for up to 10 years post-filing. The debts that were forgiven will also likely appear on the report as well. This fact deems it important that you check to make sure your old debts and bankruptcy filings are listed correctly when you file.  

Your Student Loans Stick to You 

Student loans are notorious for turning into debt monsters, following people around until they’re fully fed. Unfortunately, when you file for bankruptcy, your student loan debts are not forgiven. There is a small chance that you will be able to prove that your student loans are “undue hardships,” but that is difficult to do.  

Your Creditors Will Be Notified.  

Upon filing for bankruptcy, everyone that you owe money to will be notified by the court. This is something to be aware of if you owe money to family members or friends. It is probably best to notify them yourself before the court letter makes it to their home.   

Filing for bankruptcy is a big decision. Before you take action, the best thing you can do is consider each of your options, noting the consequences and benefits of each one. Contact a Pensacola Bankruptcy law firm for more info today!

Lewis and Jurnovoy      2714 West 15th St.  Panama City, FL 32401                     (850) 913-9110        www.lewisandJurnovoy.com