What are the Pros and Cons of Declaring Chapter 7 Bankruptcy?

Declaring bankruptcy is one of the most monumental that you would have to make in life.  On one hand, it takes an unbearable financial load off your shoulders. On the other hand, it ruins you financial reputation such that few lenders are willing to work with you. Before you make the decision to file for Chapter 7 bankruptcy, what are the pros and cons of doing it?


  • Quick relief

It takes 3-6 months to complete a Chapter 7 bankruptcy.  This means that you could get relief from lawsuits, repossessions and recovery letters in a short time. Filing early prevents a bad situation getting worse.

  • Protection

Many states have laws to protect the assets of a debtor some having generous laws that allow keeping more than would be expected.  Your salary or wages and any assets you buy after filing for bankruptcy are also protected against getting attached.

  • New lines of credit

You will be able to access new lines of credit after 1-3 years depending on how good you work at improving your credit scores.  There are many lenders willing to work with people with bad credit. This will allow you to work on your credit score by repaying these small loans.

  • Unlimited debt relief

While some debts survive bankruptcy, for example, student loans, you can get debts written off on many other kinds of debts, for example, credit cards.

  • Favorable pay terms

When you file for a bankruptcy, you get friendlier terms to pay off the surviving debts which mean your financial planning becomes easier and more sustainable without sliding into further debt.


  • Bad credit

Your credit ratings become worthless meaning few lenders are willing to look at your loan applications. The bankruptcy will be recorded in your credit history and it can remain there for up to 10 years.

  • Loss of assets

Assets that are not protected are repossessed to recover your debts. Some of these assets could have great emotional attachment for example family jewelry.

  • Loss of credit lines

You lose all your credit cards which can be very constraining as you have to do all payments in cash.

  • Surviving obligations

Chapter 7 bankruptcy does not exempt you from paying alimony and child support. You also have to pay taxes where applicable. Some loans like student loans survive a bankruptcy and have to be paid in full.

  • Embarrassment

Before the court declares you bankrupt, you have to give full details of how you got into your financial difficulties.

Get legal assistance

When considering whether to file for a Chapter 7 bankruptcy, it would be good to engage the services of the Pew Law Center, PLLC so that you can understand the implications of the bankruptcy in full.

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About the Author

Fairfield County, Connecticut Attorney David Volman provided personalized legal representation for Family law, personal injury, bankruptcy, criminal cases, real estate & business law.