What are the Mississippi Chapter 7 pros and cons?

The type of bankruptcy most individuals in Mississippi are likely to be familiar with, even if they have never declared bankruptcy themselves, is Chapter 7. Under Chapter 7 bankruptcy, many of a person's assets are liquidated to repay creditors. As a result, this type of bankruptcy is very attractive to those who struggle to cope with burdensome personal debt. On the other hand, some debtors may be hesitant to file since they worry about the credit-related drawbacks of this type of debt relief.

There are many different pros and cons of declaring any type of bankruptcy, and Chapter 7 for individuals is no exception. One of the main downsides related to credit is that Chapter 7 harms a person's credit score for years, as this type of bankruptcy can stay on a person's credit report for up to a decade. Nonetheless, the actual Chapter 7 process lasts only about three to six months. So, the tradeoff is a damaged credit score, but a relatively quick way to get out from under overwhelming debt.

In addition, if a person opts against Chapter 7 when it is actually the most appropriate solution, he or she may find their credit score damaged anyway. With multiple debts that can't be paid back, such as a mortgage, auto loan or credit cards, it is likely that a person's credit score will be severely tarnished anyway. Declaring bankruptcy also shows potential future lenders that a person is willing to take serious steps to fix their financial situation and get back on their feet.

Some debtors may worry that, under Chapter 7, they may lose all their credit cards. However, this can actually be a benefit since credit cards are often what gets a person into financial trouble in the first place. As difficult as it may be at first, losing one's credit cards may be a benefit in the long run. In addition, in many cases a person can obtain new lines of credit in about one to three years.

There are many other credit-related advantages to Chapter 7, such as its ability to stop creditor harassment. A knowledgeable bankruptcy attorney can help an individual get started on learning more about Chapter 7 or Chapter 13.

Source: FindLaw.com, "Pros and cons of declaring bankruptcy under Chapter 7," accessed on Oct. 21, 2014

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