Weighing The Pros and Cons of Chapter 7 Bankruptcy


  • Unpaid balances that are left after assets are sold off to repay creditors are erased, meaning that individuals are free from the majority of their debt. This allows them to turn their life around much more easily and get their life back on track.
  • Many types of property are excluded from being taken and sold off to repay debts. This includes household appliances, personal pensions, tools needed for the individuals’ type of work, and cars up to a certain amount of value.
  • Bankruptcy filings usually only take a few short months (typically 3-6), meaning that individuals will quickly be free from the majority of their debt fairly quickly. Even though bankruptcy stays on individuals’ records for a long period of time, if an individual who should have filed for bankruptcy does not, the missed payments of debts that they will probably have will also hurt their credit score. Bankruptcy can help an individual begin to turn their credit around and give them the stance they need to improve their credit scores in the future.
  • There is no limit for the amount of debt that an individual can get taken away from Chapter 7 bankruptcy. This also means that there is no minimum that an individual must have before they can file, unlike Chapter 13.
  • Although individuals have to wait 6 years after filing for Chapter 7 to re-file, Chapter 13 bankruptcy can be a solution during that time if another crisis arises.


  • Chapter 7 bankruptcy will remain on an individual’s credit report for 10 years. During this time they will find it almost impossible to get any kind of credit, loan or financing. This can prove very difficult for those looking to do things such as buying a house, going to school on loans, and other costly things in the near future after bankruptcy.
  • Individuals filing for Chapter 7 will also lose all of their current credit cards. Although overall this can be helpful because it will help keep them from getting into credit card trouble in the future, it will limit them from being able to make needed purchases on credit cards for years to come. Although they can reapply for cards, they will find it much harder to be accepted and if they are, will have much higher interest rates and fees.
  • Individuals may also lose their property if it is not exempt from sale under bankruptcy law, as well as some of their luxury items. These items are sold off by bankruptcy trustees to pay back creditors that the individual owes.
  • Once an individual files for bankruptcy they may not do so again for at least 6 years after that exact date. This means that if something more pressing or challenging arises in the near future bankruptcy is not an option for the individual. Individuals should really make sure that at the time of filing for bankruptcy, that it is really the only option left to them.

Although bankruptcy is an option that should only be resorted to in an extreme time of need, there are positives and negatives when using this option. Be sure to consider every other option before choosing to file for bankruptcy.

Ashley Russell

Ashley Russell

Ashley Russell is a junior at the University of North Carolina at Chapel Hill. She is double majoring in Journalism and English with a minor in Information Systems. After she graduates in the spring of 2013, she hopes to continue to work for the UNC system. Her ultimate goal is to become a book editor. She recently worked as an intern at the John W. Pope Center for Higher Education in Raleigh, North Carolina, researching and writing articles, as well as building two new websites for college applicants and alumni. She now works for the Medical Foundation of North Carolina as an office assistant and web designer. She opens the office every morning and takes care of the daily tasks and scheduling. She also uses her down time at work to create fundraising web pages that benefit the hospitals in the UNC-Chapel Hill area.

Ashley Russell is a North Carolina native, hailing from Kings Mountain. She is a diehard Carolina fan who loves to watch her team play in any sport—a Tar Heel born and bred. She loves to read and write in her free time. Since high school, she has known she wanted to pursue a career that involved both reading and writing. However, she has recently discovered a love for computers, so she also hopes to incorporate them into her career. She spends her free time tutoring k-5 students in reading and writing in the Chapel Hill area. She is a second-year captain of a Relay for Life team and a participant in Dance Marathon 2011. She is also the online webmaster for the Blue & White magazine based out of Chapel Hill.
Ashley Russell

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