What you should consider before filing for Chapter 7 bankruptcy

Making the choice to file for bankruptcy is not easy. If you are considering this choice, it is probably because you are struggling with debt and unsure of how you will manage your payments on your own. While bankruptcy may not be your first choice, it could be a viable way by which you can secure a better financial future.

Chapter 7 is the most popular choice for bankruptcy. It only takes a few months to complete, and it allows the applicant to discharge specific types of debt, such as medical bills and credit card debt. However, there are strict eligibility requirements you must meet in order to qualify. Before you move forward, you will want to learn more about the benefits of this choice and potential negative implications that can affect your future.

The benefits of Chapter 7

There are many reasons why Chapter 7 is the preferred chapter of bankruptcy for many New Mexico consumers. Even though Chapter 7 is liquidation bankruptcy, there are exemptions that will allow you to keep most of your personal property. It will also shield you from aggressive collection attempts from creditors. During this process, you will be able to discharge most, if not all of your debts.

Filing for Chapter 7 bankruptcy will affect your credit, but you will be able to seek new lines of credit as soon as one to three years after filing.   Car loans can usually be obtained shortly after filing if you are able to qualify for the loan by demonstrating you can make the payments.  There is usually a two to three-year period before you can qualify for a home loan.

The drawbacks of bankruptcy

There are a few potential drawbacks associated with Chapter 7 bankruptcy. For example, it could impact your ability to have a credit card or get a mortgage for a long time. You may also lose some of your possessions, specifically those considered luxury items. This includes second homes, extra vehicles, valuable collections and more.

For you, one of the potential drawbacks of bankruptcy may be having to explain your situation to a judge or trustee, which involves discussing private financial matters with someone you do not know.

A better future is possible 

You do not have to continue to struggle under the weight of your financial problems alone. You have the right to seek protection from creditors and a way out of your financial situation. Chapter 7 could offer you a way to a better future that is free from many types of debt. You can learn more about what this choice will mean for you specifically by seeking a complete evaluation of your case from a competent bankruptcy attorney.