What Are The Good and Bad of Chapter 7?
A liquidation case (Chapter 7) wipes out (discharges) all of your listed debts (except for certain types mentioned above) without the burden of a long payment plan. This is known as the “fresh start” provision of federal bankruptcy law. However, the court will not force lien creditors, such as a creditor holding a mortgage on your home or the financing on your vehicle, to let you keep that home or vehicle. If you have been a good account customer, they may allow you to resume your payments directly to them, but they can instead ask the court to allow them to foreclose or repossess against you. Moreover, either type of bankruptcy remains on your credit record for ten years — and some lenders may look more favorably on a person who completed a payment plan than someone who discharged all of their debts.
