Many people assume that filing for Chapter 7 is a one-stop solution for bankruptcy. However, it’s not as simple as it sounds. The truth is that while filing for Chapter is touted as a sure way to resolve bankruptcy that is full of pros, it has its cons too. Depending on your own unique situation, it may save you from bankruptcy, or it could turn out to be a mistake for you.

It’s best not to rush things. Investigate and consider all other possible solutions for your financial problem before filing for bankruptcy. Keeping this in mind, below we explain some of the reasons why Chapter 7 may be a mistake for you.

1. Chapter 7 may damage your credit for years to come
   If you file for Chapter 7 bankruptcy, it can be seen on your credit report for as long as the next 10 years. So, for debtors who have low credit scores due to various reasons like lawsuits, defaults or repossessions and still file for Chapter 7, their credit score will decrease even more. In addition, it may also be difficult to get a new credit.
2. Chapter 7 will lead to property loss
   The entire idea of Chapter 7 is liquidation. This means that the bankruptcy trustee can sell all of your non-exempt assets, and use the money to pay back the creditors. While this may not be a problem for debtors who do not have many assets, for people with many luxury possessions, they may have to give up and sacrifice a lot. Apart from losing your property and/or assets, you may also be at the risk of losing all your credit cards for some time.
3. Chapter 7 will not cover unsecured debt
   One huge advantage of filing for Chapter 7 bankruptcy is that your unsecured debts will not be discharged. These include student loans, child support debt, credit card debt, medical bill, payday loans, child support debt, alimony support debt and more. Only secured debts like vehicle loans, mortgages, etc will be covered by Chapter 7. So, think twice about your debts before making a decision and consult an attorney.
4. Chapter 7 is not a good idea if you have increasing debts
   If you file for Chapter 7 now, it will be more difficult for you to handle any debts you may have in the future. You are not allowed to file for Chapter 7 again for the next 6 years, making it highly unlikely that you will be able to resolve any debt you have in the coming years that you are unable to pay. These 6 years are counted from the day of filing for bankruptcy. So, it is best to consider all other options before going ahead with filing for Chapter 7 bankruptcy, especially if you believe you may need it in the near future.
5. Chapter 7 makes it difficult to be approved of a mortgage loan
   If you file for Chapter 7 bankruptcy, it may be extremely difficult, often time impossible to be approved of a mortgage loan. So, if you do not already have a mortgage, and you think you will need it soon, it’s best not to file for Chapter 7 and consider other solutions to your current financial crisis.
6. Chapter 7 may be converted to Chapter 13
   Lastly, there are some instances where a debtor originally files for Chapter 7 bankruptcy, but instead gets converted to Chapter 13 by the Massachusetts court. This is because the court thinks it may be better to arrange a repayment plan if your income reaches a certain disposable amount. This change of plans will lengthen the duration of repayment period from a mere four to six months, to three or five years.