A Chapter 7 bankruptcy filing is a way to get debt under control for some individuals. This is a serious step to take so you must ensure that you consider the pros and cons of taking it. There are several things that you should think about before you file so that you don’t do something you’ll regret.
One of the primary and immediate effects is that you won’t be able to rely on credit. This is a big step if you’ve come to rely heavily on it to pay your bills. You’ll have to lose all your credit cards, and you’ll be unable to obtain new credit while your case is moving through the court system.
Once you’re able to obtain new credit, you’ll find that the terms aren’t very favorable. You’ll likely have a lower credit limit than what you had before, and you’re likely going to have a higher interest rate. These occur because you’re a higher credit risk, but they should improve as you rebuild your credit by making payments on time.
Another thing that you’ll have to deal with is that you probably won’t be able to obtain a mortgage for a while. You’re considered a bad risk for a mortgage in the period immediately following bankruptcy even though this is a secured form of credit.
You have to qualify to file a Chapter 7 bankruptcy. Working closely with your bankruptcy attorney can help you ensure that you meet the requirements and are handling your case appropriately. This is your first step to financial freedom. Once the bankruptcy is finished, you’ll be able to rebuild your credit and move forward with your life.