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Weighing the pros and cons of Chapter 7 bankruptcy

For those struggling every month to pay their bills, harassing phone calls from creditors, warning letters in the mail and the sinking feeling when the doorbell rings may be part of everyday life. They may daydream of having all their debts magically disappear so they can start fresh. For many in Connecticut in this situation, Chapter 7 debt relief may be a possibility.

Chapter 7 bankruptcy involves the liquidation of assets to pay down debt. After that, the balance left on some debts is often forgiven by the creditor. Each state carries certain exemptions for assets a person can keep from liquidation, for example a home or car, but many luxury items will likely be included in the liquidation. Those filing for Chapter 7 must give up their credit cards, but after a certain time, they will be able to begin rebuilding their credit.

Certain debts cannot be included in a Chapter 7 bankruptcy. For example, delinquent child support payments and student loan debt cannot be discharged. However, it is often the case that the filer is better able to make payments on those obligations when other burdensome debts are discharged. Additionally, while many hesitate to file for bankruptcy because of the damage it does to one's credit rating, a person under Chapter 7 protection can begin right away to rebuild that credit. Besides, in many cases, people who consider bankruptcy already have delinquencies and other black marks damaging their credit.

Making the decision to file for bankruptcy protection is difficult and very personal. However, obtaining the counsel and advice of a professional may give one a clearer idea of the options available and the rules that govern Connecticut's Chapter 7 bankruptcy proceedings. Speaking with a bankruptcy attorney will provide compassionate advocacy to help one make the best decision for moving forward.

Source: FindLaw, "Pros and Cons of Declaring Bankruptcy under Chapter 7", Accessed on July 7, 2017

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