The TOP 5 Pros and Cons of Filing for Bankruptcy

To file or not to file, that is the question…

The decision of whether or not to file for Bankruptcy depends heavily on your personal situation. For some, filing for Bankruptcy can be just the helping hand they need to get out of the hole and get their financial life on track. For others, Bankruptcy can do far more harm than good….So, how do you decide? Well, to start, it’s important to know the ins and outs of Bankruptcy, the pros and cons of Bankruptcy in general…which we’ve collected for you here: 





Elimination of most of your debt

Depending on whether you file for Chapter 7 or Chapter 13, you could be doing away with a lot of debt. To be sure, Chapter 7 frees you from your current debt (credit cards, medical debt, etc.) with no future obligations; Chapter 13 is a reorganization of your debt into a 3-5 year repayment plan, depending on your income.

Bankruptcy won’t get rid of your student loan debt

Unfortunately, no form of Bankruptcy can get rid your student loan debt; it’s there to stay. However, bankruptcy will at least help keep lenders from taking aggressive collection action, which helps!



Most states have exemption laws in place so that most things you own will be exempt from bankruptcy. It helps to stay current on your state’s exemption laws, here’s washington’s list. It’s also worth noting that you’re allowed to keep all property and wages you earn after you file.

Not all property is exempt

You will most likely lose some of your property in the process of filing, especially extraneous luxury items. These items are used in repaying your lenders, and depending on your state’s exemption laws, you may have to give up things that you’d rather not.

Eliminate Credit Card Debt

This is a big one; it’s likely that your credit cards are more than partially responsible for you declaring bankruptcy. People often pay off loans with credit cards when cash isn’t immediately available, and debt slowly snowballs from there. Filing for bankruptcy allows you to start fresh without credit card debt.

Your Credit will take a Big Hit

You will lose all of our current lines of credit, but as we said in the pros column, that may not be a bad thing. Your credit score will take a big hit for some time and Chapter 7 Bankruptcy will show up on your credit report for the next 10 years. The good news is that you’re able to apply for lines of credit 1-3 years after filing, although at much higher interest rates.

You can always file for Chapter 13

Chapter 13 Bankruptcy, which reorganizes your debt to be repaid over a 3-5 year plan, can be applied for repeatedly, although it will appear on your credit report.

Chapter 7 is not always available

You cannot file for Chapter 7 bankruptcy if: you’ve been through a chapter 13 or chapter 7 bankruptcy in the past 6 years, you violated a court order or filed improperly, or you have additional disposable income after filing.

Declaring bankruptcy can jumpstart you towards rebuilding your credit.

You can only file for Chapter 7 every six years, but Chapter 13 Bankruptcy is always available to you. So, if you’re worried about filing because you may have another impending financial crisis on the horizon, just know that there’s always options available.

Declaring Bankruptcy now may make it harder for you in the future

If you file for Chapter 7 and eliminate most of your debt, you cannot file for chapter 7 for another six years, which might come back to bite you if your debt gets away from you again. You can always file for Chapter 13, but each time you file affects your credit report, so it’s best to carefully weigh over your decision of whether or not to file.

Once again, the decision of whether or not to file for Bankruptcy really depends on your personal financial situation. While our list of pros and cons may be helpful to you, it’s really just a start. The attorney’s at Integrity Law are more than qualified to answer any and all of your bankruptcy questions. Navigating the rough waters of Bankruptcy can be tricky to say the least, but we’re here to help. For questions or concerns of Bankruptcy in Seattle, WA , please visit our website, or call anytime, (206) 838-8118