Chapter 7 bankruptcy proceedings, popularly known as liquidation proceedings, are often the hardest financial decision a Texas resident could make. Filing for bankruptcy under liquidation proceeding often leads to losing some of the most important financial assets for the debtor. It can also be a major blow to one’s self confidence and self-esteem.
The debtor might fear that the person would be ostracized by the society and community. Thus, considering the magnitude of filing for bankruptcy proceedings, one needs to assess the various advantages and disadvantages of the Chapter 7 proceedings before going to court.
One of the biggest disadvantages of filing for Chapter 7 bankruptcy proceedings is that it adversely affects the debtor’s short term financial goals as well as the person’s fiscal position. A Chapter 7 bankruptcy filing can remain in the debtor’s financial records for a decade and can affect one’s ability to qualify for credit during that period of time.
In most cases, the debtor usually consults not only financial advisers but also professional bankruptcy lawyers who help them in coming up with the best solution available to them in order to relieve them of their financial adversities.
It must however be noted that Chapter 7 bankruptcy proceedings are filed in mostly those cases where the debtor is hard pressed for financial choices and cannot meet the person’s debts and has already defaulted on the debts for some time.
Therefore, most debtors who are defaulting on their present debts already have a bad credit record which might not be able to get any better in the foreseeable future without a liquidation proceeding. A bankruptcy proceeding that takes less than six months can relieve the debtor from their ongoing financial struggle.
Source: FindLaw.com, “Pros and cons of declaring bankruptcy under Chapter 7,” Accessed on May 15, 2015
