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What's The Downside Of Filing For Chapter 7 Bankruptcy?

Filing for Chapter 7 bankruptcy is not a simple decision. Although it comes with many benefits, such as giving you a fresh start, there is also a downside. Remember, when you file for bankruptcy, it is because you cannot satisfy all your debts. Thus, it can only be expected that there is another side to the relief that Chapter 7 bankruptcy provides. Here’s more.

New York Bankruptcy Lawyers Can Help

Law Office of Simon Goldenberg helps clients resolve financial dilemmas through bankruptcy, foreclosure, or other legal avenues. Our attorneys have the most up-to-date information on the bankruptcy process. If you are considering filing for bankruptcy, modifying your mortgage, or are facing unmanageable credit card or student loan debt, we are here for you. To consult with Law Office of Simon Goldenberg, call (888) 301-0584 or contact us online today.

It's A Public Record

When filing for Chapter 7 bankruptcy, you should know that your name and filing become a public record. Thus, anyone can type in your name and learn the particulars of your financial circumstance. Not only can this be quite embarrassing, but it may also even feel like an invasion of privacy. However, the law permits this information to be shared so that you can't shield yourself.

If this doesn't sound like a big concern, consider how knowledge of your bankruptcy status may affect your reputation. Suppose you're well known at a social club. If other members learn that you've filed for Chapter 7 bankruptcy, they may disassociate with you or make you feel unwelcomed. Suppose you work in financial accounting or management. Your employer, district manager, or the company's CEO may think that you're unqualified to continue with this position, regardless of how well you once performed. After all, imagine how it could damage the business' reputation if a high-ranking employee had to file for bankruptcy.

Credit Report

Did you know that your credit score will report your Chapter 7 bankruptcy for as long as ten years? Over a lifetime, you may regard ten years as a blip in time, but it is a significant number of years. As you know, you'll need a good credit score for a loan agency to approve you for most loans. The lower your credit score, the less likely any agency will approve a loan in your name, especially without a co-signer. Yet, your family and friends may be hesitant to agree to co-sign your loan because they're aware of your financial struggles.

Now, suppose you want to start a business and need funding. Without approval from a loan agency, this feat may be impossible for the next seven to ten years. Furthermore, most reputable apartments, homes, and car agencies request access to your credit report. If you have a very low score and filing for any bankruptcy chapter negatively impacts your score, any of these places may turn you away. If they don't turn you away, you can rest assured that they will charge you a high-interest rate. Apartment owners often require as much as three months' rent, paid upfront, if you have a low credit score.

Starting Over Isn't Always Easy

Starting over may not be as easy as you think. Remember, you had to forfeit most or all of your assets, and you may have liquidated important property, such as your home. If you filed because you have been out of work, there is a possibility that you can become homeless. In other words, you may have to move in with relatives or friends for a while. You may have to resort to couch-hopping. Not to mention, due to the negative impact bankruptcy has on your credit score, it'll be that much harder to secure a preferable living arrangement.

Child Support

Typically, parents who file for Chapter 7 bankruptcy are in child support payment arrears. Their debt to their children is one of many other debts. In fact, some parents, who are responsible for making the monthly payment, hope that filing for Chapter 7 bankruptcy will reduce their child support payments. If you filed for this chapter with this hope in mind, you should know that the amount you pay still may not be reduced to an amount that's doable or preferable to you.


As you know, alimony (a.k.a spousal support) is similar to child support. Although alimony isn't something you have to pay for eighteen years, a judge will order you to pay it for a specific number of years based on the length of your marriage. When people file for bankruptcy, one of the most common debts is this debt. Thus, those who file often wish and hope that a divorce court judge will reduce their monthly alimony payment. A judge will only reduce the amount if there's been a substantial change in your circumstance.

Filing for bankruptcy is a substantial change in your circumstance, but it will not negate this obligation. Although a judge may reduce the amount, your alimony may still not be reduced to an amount that's doable or preferable to you. You'll still have to pay for it.

Why Do I Need A Bankruptcy Lawyer?

The decision to file for bankruptcy is a decision that you should not take lightly. It will have long-term effects on your life that may make you question whether you made the right choice. You should always want to feel confident that the bankruptcy chapter you filed for is the chapter that's best for your hardship and prospects. Therefore, before you file, speak with an experienced New York bankruptcy lawyer as soon as possible. The lawyers at Law Office of Simon Goldenberg are here to help, so call us at (888) 301-0584 or contact us online for a free consultation.