Pros & Cons of Chapter 7 Bankruptcy
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When considering Chapter 7 bankruptcy, you will want to meet with an experienced bankruptcy attorney to fully understand how this type of bankruptcy will impact you. If you pass the Means Test for Chapter 7 bankruptcy, you will want to take the time to consider the advantages and disadvantages of a Chapter 7 bankruptcy prior to filing.

Advantages to a Chapter 7 Bankruptcy:

  • You receive a fresh start. After the bankruptcy is discharged, the only debts you owe will be for secured assets on which you choose to sign a "Reaffirmation Agreement" and any debts excluded from a Chapter 7 discharge.
  • Creditor's collection efforts and wage garnishment attempts are immediately stopped on the date of bankruptcy filing.
  • Except for inheritances, any income you earn and property you acquire after the bankruptcy filing date are yours.
  • There is no minimum amount of debt required to file this type of bankruptcy.
  • Your case is often over (discharged) in about three to six months.

Disadvantages to a Chapter 7 Bankruptcy:

  • The Trustee will sell any non-exempt property you own. If you want to keep a secured asset, such as a car or home, and it is not completely covered by your bankruptcy exemptions then Chapter 7 is not an option.
  • The automatic stay created by filing Chapter 7 Bankruptcy only serves as a temporary defense against foreclosure.
  • Co-signors of a loan can be stuck with your debt unless they also file for bankruptcy protection.
  • A Chapter 7 bankruptcy can only be filed once every eight (8) years.

These are general guidelines. Every situation is different and your circumstances will determine which type of bankruptcy, if any, is the best decision for you. To learn about the options available to you, use the form below or call an office near you to schedule your FREE Consultation with a bankruptcy attorney. You will not spend a dime to get the legal advice you need to make such an important decision!


The Bankruptcy Company is a debt relief agency helping people file bankruptcy relief under the Bankruptcy Code. The choice of an attorney is an important decision and should not be solely based on advertisements.