Filing Chapter 7 bankruptcy in most cases means you will have debts dismissed without having to pay them off. For you, this can mean regaining solid financial footing, but you’re the creditors, it means losing money.
However, once you file Chapter 7, you will not be able to file again for eight years, according to Experian. Your bankruptcy filing will remain on your credit report for 10 years. While this may not stop you from being to secure credit in the future, it can still have some negative effects, such as higher interest rates. However, there are other impacts filing will have than just on your credit.
You may lose assets
If you have assets beyond the exemptions you may claim, the court can seize them and sell them to pay back your creditors. You could lose sizable assets.
If you file on a secured debt, the lender can seize the asset you used to secure the debt. For example, your car loan lender may repossess your vehicle or you may lose your home to foreclosure.
You will be stuck with some debts
There are some debts you cannot get rid of through bankruptcy. These include child support and taxes. You also cannot discharge student loan debt. You will still have to pay on these and face any collection actions if you fail to do so.
You may impact others
If any of the debts you have are jointly owned or you had a cosigner, then the other owner or cosigner may be liable in full for the debt. This could cause those people financial hardship.
The impact of your bankruptcy is something to consider before you file. You have to think beyond what it may do to your credit.