What will filing for Chapter 7 bankruptcy do to my finances?

It is important that readers of this blog understand that their financial situations are unique. Individuals are advised that this and other articles on this blog are informational only and case-specific help should be sought from a bankruptcy attorney.

However, there are some general points that readers may find valuable about the effects of Chapter 7 bankruptcy on filers’ personal finances that are relatable across cases. For example, a person who has their debts discharged through Chapter 7 bankruptcy may see the process on their credit report for up to a decade. As a person’s credit report and score are used by lenders for the purpose of securing loans, mortgages, and credit cards, the presence of a bankruptcy can have a wide impact on a person’s capacity to receive credit.

Additionally, filing for Chapter 7 bankruptcy will force a person to take stock in their actions regarding how they got to the point of needing the protections of bankruptcy to get back on financial footing. A filer will generally have to explain themselves to their bankruptcy court to move through the process toward discharge.

Finally, a Chapter 7 bankruptcy filing may force a person to change their lifestyle and standard of living as Chapter 7 requires filers to liquidate many of their assets to pay back their creditors. Filing for Chapter 7 bankruptcy is not an insignificant undertaking and can have far-reaching consequences for a person’s finances. Speaking with a bankruptcy attorney is a good way to have a person’s questions answered about the process.