Pros And Cons Of Filing For Chapter 13 Bankruptcy
If you are considering filing for bankruptcy because you've fallen into some difficult financial times, you may wonder which type of bankruptcy to file. There are a couple available to individuals, but certain qualifications must be met for each.
Pros of Chapter 13
Filing for Chapter 13 allows you to keep your assets, but you must have a consistent income in order to pay your debt off. Also with Chapter 13, it can take a few years to pay that debt off. Here are so more pros and cons of filing for Chapter 13 bankruptcy.
The most obvious advantage to filing Chapter 13 is the fact that you can hang onto your assets. Also, a Chapter 13 repayment plan is generally flexible, allowing you time to pay off your debt and still be able to have money for usual living expenses. Once you have completed your payment plan under Chapter 13, those individual creditors cannot come after you to pay the debt off in full. You are fully protected under Chapter 13.
You also may be able to apply for new credit cards about three years after your bankruptcy is discharged, so you're allowing your self to slowly, but surely, rebuild your credit. Even though a Chapter 13 stays on your records for a number of years, it's easier to explain then a multitude of missed payments, defaults and repossessions are.
Cons of Chapter 13
As with anything, there's always the downside. To start, since you get to keep your assets, your disposable income is used to pay off your debt. You get to have enough money to pay for medical bills, food and shelter, but don't expect to have a ton of money to take a luxury vacation. Your extra cash pays off your debts.
You will also not be relieved of your obligation to pay child support or alimony, although this is true of whatever type of bankruptcy you decide to file.
You'll also have to explain to the bankruptcy court how you got yourself in this type of situation to begin with, and you will be required to take a credit counseling course as part of your condition for bankruptcy.
Lastly, you can't file for Chapter 13 if you had a recent filing of a Chapter 7 or Chapter 13 dismissed within the previous 180 days to your new filing.
If you want to learn more or have other questions about chapter 13 bankruptcy, try contacting a professional such as John G Rhyne Attorney At Law for help.