If you find yourself struggling with debt and are looking for relief, you may find that the option that best suits your needs is filing for Chapter 13 bankruptcy. While a bankruptcy attorney can help you find the best debt solution for your specific needs, the following list of pros and cons can help you get a rough idea of if Chapter 13 bankruptcy is right for you.
What is a Chapter 13 bankruptcy?
This bankruptcy is available for debtors who have debts that fall under a maximum value, but also have an income that would allow for regular repayments over a period of time.
Unlike Chapter 7, which discharges your debts outright, Chapter 13 will give you a three to five year period in which to pay off debt by way of regular payments. However, after the time period, the remaining unsecured debt is discharged.
- All of your debts are grouped into a single debt repayment plan.
- Your debt is adjusted to relate to your income.
- You will get to keep any property that you make payments on.
- There is no risk of your assets being sold.
- After a 7 year period, the accounts listed on the bankruptcy will be removed.
- No income test is required.
- This type of bankruptcy is looked upon favourably by lenders, as it shows you took the responsibility to repay debts.
- You will be required to make payments for up to five years.
- All of your disposable income at the time of filing the bankruptcy will be required to be committed to paying off the debt.
- The bankruptcy will appear on your credit report for 10 years.
- You will not be able to file for a Chapter 7 bankruptcy for up to 6 years.
This post was written by Trey Wright, a bankruptcy attorney in Tallahassee, FL. Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation.