Is Chapter 13 Bankruptcy Right For You?
While Chapter 7 discharges your debts, Chapter 13 offers an ability to reorganize and repay your debts over a longer period. Chapter 13 bankruptcies create a three- to five-year plan with your creditors and a court-appointed bankruptcy trustee. You must make monthly payments to the trustee and the trustee then distributes the money to your creditors. At the end of the plan, you may still end up being able to discharge some debts, but it’s a different path for each of those who qualify.
The attorneys at Rick Law can help you determine if Chapter 13 is right for you, and if so, we can guide you through the process.
The Benefits Of Filing Chapter 13
Here are some reasons why Chapter 13 bankruptcy is an attractive option for many debtors:
- Since debts are not immediately discharged, you are usually allowed to keep your nonexempt assets, such as equity in your home. Chapter 13 can save your home from foreclosure.
- Nondischargeable debts (student loans, alimony, and child support) can be arranged into more reasonable payment terms.
- It creates an automatic stay that stops most collection actions so that wage garnishments can’t occur.
- It stops collection calls and delays lawsuits from being filed.
- The automatic stay protects you from losing your home in foreclosure, so long as you pay your mortgage.
- Certain debts can only be discharged in a Chapter 13 bankruptcy (certain property damage, non-dischargeable taxes, security law violations, debts related to the division of property in a divorce, etc.)
- Creditors are unable to seek payments on co-signed loans while one of the parties is protected as a Chapter 13 bankruptcy participant.
- A bankruptcy trustee moves the process along for you
Working with an attorney allows us to communicate with your creditors and work with you to determine what debts you should be paying.
Keep These Potential Downsides In Mind
There are some drawbacks to pursuing Chapter 13 as well, including:
- The filing process can take 95 days or longer from when the petition is filed to get the repayment plan approved by the court.
- The bankruptcy lasts for between three and five years.
- Many Chapter 13s turn into Chapter 7s as time goes on.
- Legal fees for Chapter 13 are higher.
- The bankruptcy will not actually be discharged until after the repayment plan has been completed.
- It impacts your credit score.
Chapter 13 works for those who can afford to pay some but not all of their debts. Chapter 13 helps you achieve more reasonable payment terms and affordable payments for credit cards and medical bills.
Talk To An Attorney About Your Bankruptcy Options For Free
If you are interested in seeing if you qualify to file for bankruptcy, you should get in contact with an experienced bankruptcy attorney at Rick Law. We can help you avoid common mistakes made by many as they look to achieve financial freedom. To get started, please send us a message online or call 610-850-9036.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.