What are the Chapter 7 Bankruptcy Penalties?

Chapter 7 bankruptcy is one of the most popular types of bankruptcy filings in the United States. Thousands of people rightly use this to get a debt relief from their creditors. It does save them from harassment from the creditors. However like all other chapters of bankruptcy this does have its downside. It can attract multiple penalties and before you file for bankruptcy under this chapter you need know the penalties that can come along with this bankruptcy chapter. Here in this short write-up we shall discuss some of the penalties that this chapter attracts.

It Can Affect Your Spouse

Though this isn’t common in some cases your spouse may be affected by your title 7 bankruptcy. The law in certain states such as Arizona, California, Idaho, Louisiana, Nevada, and New Mexico affects both you and your spouse. This happens when your spouse is responsible for your debt or is contractually bound to it such as when they co-sign or act as a guarantor to your debt. However you can definitely claim exemptions under certain conditions. Another way that it can affect your spouse is when they are using a supplementary credit card as these have the same account number as yours and they stand to lose the cards.

Poor Credit Score

One of the biggest downsides of filing for a bankruptcy is to do with your credit score. Once you have filed for bankruptcy it becomes a matter of public record and this will become a part of your credit score or in other words make your credit score poor. It will be listed against your credit history for a period of 10 years which worsens your chances of getting loan easily. Also you won’t be able to file for bankruptcy again for a period of 8 years after the initial filing. This might also lead you to losing your credit cards as the issuing company has the discretionary right to issue or deny you a credit card.

Properties and Assets Might Be Ceased

Once you have filed for the bankruptcy under chapter 7 many of your assets might cease to exist. This can include your property and vehicles. They might be liquidated by the trustee in order to make payments to your creditors. You might be allowed to keep some of your assets but this might vary depending on the jurisdiction of the state and amount of money that you owe to your creditors. You also need to keep in mind that this type of bankruptcy filing doesn’t relive you of certain types of debts such as alimony, child support, drunken driving debts, student loans and income tax debt which you will have to keep paying.

If you are planning to file a bankruptcy under Chapter 7 you need to get in touch with an attorney who specializes in this field. He or she will guide you through the entire process of filing for a bankruptcy and also seek maximum exemptions for you.

This post is shared by Attorneyforbankruptcy.com, which a leading law firm of California. Here you can have detailed information on San Jose Chapter 7 Bankruptcy Lawyer and Wage Garnishment California Law