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During a Chapter 7 bankruptcy, a court wipes away your qualifying debts. Unfortunately, your credit will also take a major hit. If youve gone through a Chapter 7 bankruptcy, youll need to wait at least 4 years after a court discharges or dismisses your bankruptcy to qualify for a conventional loan.
There are only two ways to get a bankruptcy removed from your credit report: file a dispute with the credit bureaus or wait for the bankruptcy to leave the report after seven to 10 years.
11 U.S.C. 727(a)(1). Although an individual chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged. Moreover, a bankruptcy discharge does not extinguish a lien on property.
You could lose assets of value Depending on which type of bankruptcy you qualify for, your income, the equity in your assets and other factors, you may lose your home, your car and other valuable items. Your trustee may be required to sell these items to repay your creditors.
Debts such as child support, alimony, most student loans, and certain tax debts are typically not discharged. A Chapter 7 bankruptcy is typically removed from your credit report 10 years after the date you filed, and this is done automatically, so you dont have to initiate that removal.
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Youll still have to pay court-ordered alimony and child support, taxes, and student loans. The consequences of a Chapter 7 bankruptcy are docHub: you will likely lose property, and the negative bankruptcy information will remain on your credit report for ten years after the filing date.
Cons of Filing Chapter 7 Bankruptcy A bankruptcy stays on your credit report for up to 10 years. You can only file bankruptcy once every eight years. You are only allowed a certain number of exceptions. The legal process can be daunting and some find it embarrassing. Secured debts are dis-chargeable.
Chapter 7 works very well for many people, especially those who: own little property. have credit card balances, medical bills, and personal loans (these debts get wiped out in bankruptcy), and. whose family income doesnt exceed the state median for the same family size.
One key difference between Chapter 13 and Chapter 7 bankruptcy is that Chapter 7 allows people to completely eliminate their unsecured debt after a specific period. In contrast, Chapter 13 allows people to reorganize their debts while paying back some portion of what they owe.
Domestic support obligations, like alimony and child support are always considered non-dischargeable debts in bankruptcy. You cant get rid of past due domestic support payments by filing a bankruptcy case. This is one of those public policy interest exceptions.

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