Pros and Cons of Bankruptcy

Posted by Bruce White | Oct 26, 2017 | 0 Comments

Before declaring bankruptcy, consider the benefits, as well as the potential harm. The positive and negative consequences of bankruptcy will depend on the type of bankruptcy you file for. Here, we address the most common forms of bankruptcy and what you need to know before filing.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the quicker and more straightforward of the bunch. Unsecured debts (debts that do not require collateral in order to receive a loan) can be canceled when the debtor surrenders their assets.


- Chapter 7 bankruptcy is a relatively quick process, typically spanning no more than 6 months. (This means faster relief from payments.)

- More of your property will be exempt from seizure and sale, and you will be allowed to keep the property your purchase after filing for bankruptcy.

- You can file for bankruptcy, regardless of the total amount of your debts.


- A Chapter 7 bankruptcy will be on your credit report for 10 years and do significant damage to your credit.

- You may lose extravagant, non-essential possessions such as additional vehicles, boats, diamond-studded doorknobs, etc.

- You will not be able to file for bankruptcy again for 6 years.

Chapter 11 Bankruptcy

Most commonly, Chapter 11 bankruptcy is filed by businesses, though individuals are also allowed. Chapter 11 allows for the reconstruction of debts and repayment over an allotted amount of time.


- Once you file for Chapter 11 bankruptcy, the court will issue an automatic stay, which will prohibit collectors from pursuing you for repayment.

- Filing under Chapter 11 allows you the potential to restructure your debt and pay it off over time, with no time limit on repayment.

- For business owners, this method of bankruptcy and debt reorganization can allow businesses to remain profitable and growing while still in active debt repayment.


The most significant con that comes into play during a Chapter 11 bankruptcy filing is the timeline and total cost of the bankruptcy. From start to finish, the process can take more than a year and the legal fees can be astronomically high.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is typically filed by people who can pay some of their debt but cannot afford to pay off all of it. Filing under Chapter 13 helps the debtor construct a plan to repay a portion of their debts for the following 3-5 years. This route is often taken by debtors who wish to retain their home or protect their other assets under threats of seizure or foreclosure.


- Under Chapter 13, you may still be required to continue in active debt repayment, but creditors will be able to force you to repay the full amount.

- A Chapter 13 bankruptcy can relieve you of virtually any number or amount of debts, excluding debts bankruptcy cannot dismiss.

- You can file a Chapter 13 bankruptcy at any point, even after filing other forms of bankruptcy.


- A Chapter 13 bankruptcy can mean 5 more years of debt repayment.

- You will likely still be obligated to pay your mortgage, car payments, and family costs like alimony and child support.

- Declaring Chapter 13 bankruptcy makes it far more difficult to declare a less severe form of bankruptcy later, and each instance of filing for bankruptcy (Chapter 13 or otherwise) will show up on your credit report.

Unsure what kind of bankruptcy is best for you? Let our Richmond bankruptcy lawyer at Bruce W. White help you decide.

Call us at (804) 655-0502 or contact us today for a free consultation.

About the Author

Bruce White

Aggressive Bankruptcy Attorney in Richmond Bruce W. White has been helping clients with solutions to their financial problems for over 30 years. He is experienced, skilled, and knowledgeable, and can handle your case from start to finish with the dignity and respect it deserves.


There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

Contact me Today

Bruce White Law is committed to answering your questions about bankruptcy law issues in Richmond Virginia.

We'll gladly discuss your case with you at your convenience. Contact us today to schedule an appointment.

Make a Payment

Bankruptcy clients must use a Debit card - Credit Cards are NOT ACCEPTED unless from a third party (friends or family)
All other clients may use Debit or Credit.