It can be very difficult deciding on whether or not you should declare bankruptcy. There are many significant advantages to filing bankruptcy and it gives many people a fresh financial start that would otherwise not have been within reach. It is not, however, without its disadvantages. The disadvantages of bankruptcy can vary depending on what type of bankruptcy is filed. While most individuals seem to want to pursue Chapter 7 bankruptcy, some people may not qualify or have other reasons for proceeding with Chapter 13 bankruptcy. Here, we will discuss some of the upsides and downsides of Chapter 13 bankruptcy.
What are the Advantages (and Disadvantages) of Chapter 13 Bankruptcy?
While Chapter 13 does not outright discharge debts the same as Chapter 7 bankruptcy does, it still provides individuals with the ability to making debt repayment more attainable and manageable. In Chapter 13 bankruptcy, a repayment plan is developed based on an individual’s ability to pay every month. Debts end up being repaid within three to five years’ time. Once you have completed your Chapter 13 repayment plan, individual creditors are prohibited from requiring you to pay them in full.
One of the big benefits of Chapter 13 bankruptcy is that you are permitted to retain the property that you are making payments on in your repayment plan. This can be especially important when that property is your home. Also, on the topic of retaining property, it is also significant to note that Chapter 13 will not result in the liquidation of your non-exempt property as it will in Chapter 7 bankruptcy. Chapter 13 is not a liquidation bankruptcy while Chapter 7 is. You can, however, still choose to sell off property in order to make payments in your payment plan.
Bankruptcy can, however, stay on your record for years to come. It can have a substantially adverse impact on your credit score and make it difficult to get loans, credit cards, and qualify for a mortgage. The good news is, however, that you can always work to rebuild your credit. While a bankruptcy on your record may make it more difficult, it is far from impossible, especially when a concerted effort is made to improve your credit.
There are also important limitations of bankruptcy to note. For instance, bankruptcy will not clear any alimony or child support obligations. Additionally, bankruptcy may not relieve you of your student loan debt obligation (although this is not always the case). Before filing for bankruptcy, you should be clear on what debts will and will not be addressed by the bankruptcy. The type of debt you carry can have a significant impact on whether or not it is best for you to file for bankruptcy.
Miami Valley Bankruptcy Attorneys
Considering bankruptcy? You likely have many questions on your mind. Miami Valley Bankruptcy has the answers you are looking for. Contact us today.