Is Chapter 13 Bankruptcy for You?

When considering bankruptcy, the average person thinks about chapter 7. By the time they think about filing for bankruptcy, they are generally having considerable trouble paying their bills on time. What many people don’t know is that an alternative to filing chapter 7 bankruptcy is available: Chapter 13 bankruptcy.

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy makes it possible for individuals to keep many of their possessions, by paying their reorganized debts over a period of 3-5 years. How much you end up paying back has a direct bearing on how much disposable income you have, what types of debts you owe, and how much of your personal and real estate property you wish to keep. Under chapter 13 bankruptcy, the bankruptcy court trustee who is assigned to your case can allow some of your debt to be written off, but it depends largely on your financial situation and the bankruptcy laws.

What Should I Be Considering When Filing Chapter 13 Bankruptcy?

When considering whether or not to file for chapter 13 bankruptcy, you need to think about the following things.

  • Will you still be able to repay your debt if it is modified and reorganized by the bankruptcy court trustee?
  • Are creditors bothering you, and do you need relief from their frequent calls and threats of repossession?
  • Are you facing collection, garnishment, or even a lawsuit because you haven’t been able to pay all of your creditors?
  • Do you want to keep some of or all of your possessions and/or home?
  • Do you qualify for chapter 13 bankruptcy, or chapter 7?
  • Bankruptcy doesn’t exempt you from paying some of your debts, such as tax debts, child support and alimony, and student loans.

What Are the Pros and Cons of Chapter 13 Bankruptcy?

It’s also important to understand the pros and cons of filing for chapter 13 bankruptcy. Some of those pros and cons include:

Chapter 13 Bankruptcy Pros

  • It allows individuals more time to pay their debts.
  • It allows you to keep many of your possessions, such as your home, as long as you can make the periodic payments that the trustee requires.
  • Creditors are no longer able to bother you as long as you make the agreed upon payments.
  • It doesn’t affect your credit as much as a chapter 7 because you are making every attempt to pay your creditors.

Chapter 13 Bankruptcy Cons

  • You still have to pay student loans, tax debts, alimony, child support, etc.
  • You have to make payments on your debts (under chapter 7 you wouldn’t have to make payments).
  • You may have your credit cards taken away.
  • You will have a difficult time getting new credit while paying for your debts under chapter 13 reorganization

Bankruptcy law is much more complex than can be easily described. It’s difficult for the layman to understand if bankruptcy is right for them, let alone which type of bankruptcy to pursue. At Robert H. Solomon, P.C. Attorneys At Law, we understand bankruptcy law and want to give you the fresh start you deserve. Give us a call 516-206-4703, or email us at rob@solomonlawyer.com .