Filing for bankruptcy is a huge deal because there are pros and cons that you might have to deal with as part of the process. When you aren’t able to make payments on the bankruptcy-related debts, you might need to file a Chapter 7 bankruptcy. This is also known as a liquidation bankruptcy because your nonexempt assets are liquidated in an effort to pay off as much of the debt as possible.
In order to be able to file a Chapter 7, you need to meet the criteria of the means test. This is to ensure that people who have ample income after their normal bills aren’t filing for this type of protection. People who can afford to file Chapter 13, which requires payments on the debts, won’t likely be able to file Chapter 7.
When you file for this type, you will take a hit to your credit report. This is going to last a while but you can start to rebuild your credit history once the bankruptcy is discharged. You are going to have to work to make this happen but you will likely find that it is worth it down the road.
Another thing that people worry about is how the bankruptcy is going make them look. When you are going through the process, you are actually showing that you are being responsible with your finances because you know when you are in too deep. As you are going through the court process, you can be sure that the judge and the trustee have heard and seen much worse than what is present in your case.
Source: FindLaw, “Pros and Cons of Declaring Bankruptcy under Chapter 7,” accessed May 10, 2018