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Chapter 7 Bankruptcy: When Not To File

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Are you overwhelmed by debt to the point that you're considering filing for chapter 7 bankruptcy? If so, then you should be aware that filing chapter 7 is a decision that's not to be taken lightly; while it can be a great choice for those in dire financial straits, the fact remains that a bankruptcy stays on your credit report for many years and can make it difficult to obtain new loans and lines of credit in the future. As such, you'll want to make sure that filing chapter 7 is your absolute best choice—and that none of the following situations apply to you.

You Have Property You Don't Want to Lose

When you file for chapter 7 bankruptcy, keep in mind that any assets (including property) that belong to you are subject to be taken for debt repayment. Therefore, if you have property that you don't want to lose (such as farmland that's been in your family for generations), then chapter 7 might not be the best option for you. Instead, you may want to speak with a financial advisor or bankruptcy attorney about the possibility of filing for chapter 11 instead, which will better protect your assets.

You Recently Began Making More Money

Did you recently start a new job with a significantly higher salary or come into a substantial amount of money? If so, then it might be a good idea to put off filing for chapter 7 bankruptcy—at least for now. Even a slight increase in your income could free up enough money to make a significant dent in your debts owed, so you'll want to meet with a financial advisor to determine whether or not bankruptcy is still your best course of action.

You're Taking on More Debt Soon

Finally, if you're considering chapter 7 and you know you're going to end up with more debt in the near future, you might be better off waiting to file until after that debt has posted. For example, if you're in the middle of a lawsuit and you anticipate having to pay out a settlement, you'll definitely want to wait to file. That's because chapter 7 bankruptcy only affects your debts that are outstanding at the time of filing. Any new debts you take on after the fact will not be covered under your bankruptcy, and you run the risk of repeating the vicious cycle of debt all over again.

Talk with a bankruptcy attorney, like Michael D Doyle Attorney at Law, to see if you're in the proper position to file chapter 7 bankruptcy.