How Does Chapter 7 Bankruptcy Affect Your Credit?
Chapter 7 bankruptcy can remain on your credit report for up to ten years, but it will also discharge the vast majority of your unsecured debt from your report. This discharge of debt will have a positive impact on your credit score, even though the bankruptcy remains. Any debt discharged during Chapter 7 bankruptcy will be removed after seven years. Also, as the items on your credit report age, their effect on your credit will slowly decrease. If you are currently experiencing extreme financial difficulties, leaving problematic items on your credit can actually make your situation worse.
What Happens to Debt in Chapter 7 Bankruptcy?
After you file Chapter 7, most of your unsecured debt, such as credit cards and some loans, will disappear from your credit report after seven years. Secured debts may remain unless you provide some form of collateral. If you elect to file bankruptcy, the court will initiate what is known as an "automatic stay." This will prevent creditors from contacting you and provide you with much-needed relief from harassing letters and phone calls.
What Happens to Your Property in Chapter 7 Bankruptcy?
Compared to those who file Chapter 13, individuals who file Chapter 7 bankruptcy will be allowed to retain most of their personal property. This is particularly true for individuals who have equity in their homes, and those who can afford to make payments on time. It is important to hire an experienced lawyer to make sure all of your assets are protected in a Chapter 7 case.
Alternatives to Chapter 7 Bankruptcy
If you don't want to file Chapter 7, you aren't alone. Bankruptcy is often seen as a drastic solution to debt, and many individuals are able to get back on the right financial track in other ways. Here are some common, yet effective, alternatives to bankruptcy.
As the name suggests, debt negotiation is the process of working with your creditors to reduce your overall debt.
If you are drowning in debt, you may want to consider visiting a credit counselor. These professionals can help you better understand your financial situation and craft a concrete plan to meet your goals.
Securing a low-interest loan to pay off other debts is known as debt consolidation, and it can be a powerful tool if you are trying to avoid bankruptcy.
If you choose to file Chapter 7, you will need to hire a trustworthy attorney to represent you. Call Cal West Law at (818) 446-1334 to learn more about your legal options.