Even though there are many benefits to a Chapter 13 bankruptcy filing, including the ability to pay back many of your debts through a repayment plan, there are also some potential disadvantages that could get in the way.
It's important to understand both the pros and cons before filingt, as this will help you make an informed and confident decision.
Here are some things to keep in mind:
- A Chapter 13 bankruptcy repayment plan typically takes three to five years, meaning that you'll have this in your life for an extended period of time.
- Due to the repayment plan, you don't get to keep all your income. Instead, you'll use some of it each month to make debt payments.
- A Chapter 13 bankruptcy can remain on your credit report for a period of 10 years, making it difficult to secure a loan.
- This doesn't have any impact on student loan debt, child support or alimony.
- If you file for Chapter 13 bankruptcy now, it can make it more difficult to file for Chapter 7 in the future.
While these are definite disadvantages, you have to look at the big picture when making a final decision. You must also consider the benefits, as there's a good chance that these outweigh any of the drawbacks that could affect your financial circumstances.
Filing for Chapter 13 bankruptcy is nothing to take lightly. It is a big financial decision that will impact your life now and for many years to come. Be sure to understand your legal rights, what happens once you file and your role along the way.
Source: FindLaw, "Pros and Cons of Declaring Bankruptcy Under Chapter 13," accessed May 23, 2018