What Are the Advantages of Chapter 7 Bankruptcy?


Why would someone want to file a chapter 7 bankruptcy? Don't most people do whatever they can to avoid filing bankruptcy? The answer to that question is yes. However, many that try to avoid bankruptcy wind up filing eventually. That is because it is very hard to get out of debt without filing. High interest rates, wage garnishments and constant creditor harassment make it very difficult to climb out. If you cannot get out of debt on your own within six months time, chapter 7 may be the greatest remedy. Here are some of the major advantages of chapter 7 bankruptcy as opposed to other methods of debt relief.

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1) With bankruptcy, most unsecured debt is eliminated in one step of filing a petition. There is no long-term struggle with creditors and collectors. The act of filing creates an automatic stay which prevents creditors from further collection activities.

2) You are able to rebuild your credit shortly after filing the case. Within the past three to five years, lenders have become very friendly for those with a recent bankruptcy filing. The reason for this is two-fold. First, the individual cannot file another bankruptcy within eight years. Thus, the creditor can rest assured that the debt will not be discharged. Second, lenders hope that you will fall into the same trap of paying high interest, late fees, cash advance fees as well as other fees.

3) You can start to save for your future immediately after filing. There is no waiting period. Thus, the time value of money kicks into gear. The faster that you can put your debt behind you and start saving, the greater your nest egg will be when you actually tap into it.


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