It’s not for everyone to file for Chapter 7 bankruptcy. Even if Chapter 7 bankruptcy appears to be the best option for you, it may not be if you take into account some of its drawbacks.
Of CHAPTER 7’s drawbacks
- Limitation on the Amount You Can Earn
In order to qualify for Chapter 7, your income must fall below a certain threshold. A Chapter 7 bankruptcy in Ontario will be converted to a Chapter 13 if you have a large amount of disposable income.
- Low FICO Score
Even if you file for Chapter 7 or Chapter 13 bankruptcy, your credit rating will be affected. For seven to ten years, your bankruptcy will show up on your credit report. For a period of time, you will not be eligible for new credit or loans, and you will be required to pay exorbitant interest rates if you do qualify. For people with credit scores below 600, bankruptcy has little impact. In reality, it will help you improve your grades within a few years.
- Liquidation of Assets
In order to repay your creditors, the bankruptcy trustee will sell your non-exempt assets, such as high-priced cars, real estate, and collectibles.
- Unnecessary Promotion
When you file for bankruptcy, the details of your financial situation are made public. Despite the fact that bankruptcy information can be accessed by anyone, few people do so.
- Debts that cannot be discharged
Mortgages, student loans, and auto loans that are secured by collateral are not discharged in a Chapter 7 bankruptcy Ontario. The bankruptcy does not exempt you from financial obligations like child support or alimony that you have to pay to your ex-spouse or to the government.
CONSIDER HIRING A ATTORNEY TO ASSIST YOU WITH THE BANKRUPTCY PROCESS UNDER CHAPTER 7
Chapter 7 bankruptcy has both advantages and disadvantages, making the decision to file for bankruptcy a difficult one.
Even if you can’t avoid it, you’ll want to consider ways to safeguard your most prized possessions in the event of bankruptcy.
To learn more about your legal options for resolving your debt issues, speak with a local bankruptcy attorney.
One of the simplest and fastest forms of bankruptcy is Chapter 7. This is typically the best option if it is available to you. You can expect to be free of your debts three to six months after filing for this type of bankruptcy.
- In order to achieve your financial goals, you should file for Chapter 7 bankruptcy:
- Your assets will be unaffected by your large amount of unsecured debt.
- If your property is exempt from seizure in full or in part.
- If your financial woes are exacerbated by credit cards, medical bills, payday loans, and other unsecured debt.
- As long as you make less than the median income in your area, you’ll pass the “means test.”
A Debt That Is Guaranteed
If you have unsecured debt, such as a mortgage or a car, chapter 7 bankruptcy Ontario may still be a viable option for you. If you want to keep the collateral, you’ll have to keep up with the payments on your debts.
You are allowed to keep a piece of property that is exempt from bankruptcy. Most states accept furniture, clothing, jewellery, and the equity you have in your home or car as proof of your financial worth. As a result, bankruptcy is not designed to leave you homeless and without a place to live.