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Tucson Bankruptcy Law Attorney
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Pros and cons of Chapter 7 bankruptcy

If you’ve fallen into a financial pit you just can’t seem to dig yourself out of, it’s time to consider your options for help.

Chapter 7 bankruptcy is a great way to halt creditor’s collection efforts and wage garnishment immediately. However, it may not be the best choice for everyone. Here are the pros and cons.

Chapter 7 pros

Chapter 7 is almost like a magic snap of the fingers. Poof! Your debt has vanished. Unlike a Chapter 13 bankruptcy, you won’t be responsible for paying back your debt through a payment plan. Instead, it will all be forgiven.

That means going forward, property you buy and wages you earn cannot be claimed by creditors for repayment.

These cases are usually easy, inexpensive and take less than a year to settle.

Chapter 7 cons

Where’s the catch? There’s a few. For starters, in order to qualify, you’ll have to pass a means test that compares your income, expenses and assets to Arizona resident’s state averages.

If you’ve already passed this test, filed a Chapter 7 and got your debt discharged, eight years must pass before you’re eligible to file for Chapter 7 again.

Those who pass the means test and have not filed within 8 years should still consider that Chapter 7 doesn’t cover non-exempt property. That means secured assets, such as your car, could still be sold by a trustee. Also, for those facing foreclosure, this bankruptcy option doesn’t protect a home permanently. You’d only be able to receive a temporary guard by securing an automatic stay.

One last drawback of Chapter 7 is that debt for co-signers on a loan will not disappear for your co-signers through this bankruptcy option.

What about Chapters 11 and 13?

Chapter 7, 11 and 13 are the three types of bankruptcy options you can choose from to rid yourself from debt and right your financial woes. If Chapter 7 doesn't seem right for you, other bankruptcy options may make more sense. For example, Chapter 13 bankruptcy protects non-exempt assets and keeps your home from being foreclosed.

To find out for certain which bankruptcy option may help you the most, you can take a look at our resources or contact us to discuss your unique situation.

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Judge Law Firm PLC
2123 E Grant Rd
Tucson, AZ 85719

Phone: 520-815-0281
Fax: 520-815-3000
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