If you are thinking about filing for bankruptcy, you might know that doing so could have an effect on your reputation, credit, and social image. At the same time, it might give you a clean slate, balance your emotional wellbeing, and improve your quality of life. A chapter 13 bankruptcy lawyer can listen to your situation and help you to understand what options may be best suited to your needs. Before you speak with a lawyer, consider the pros and cons of filing for Chapter 13 bankruptcy.
Pros and Cons of Filing for Chapter 13 Bankruptcy
The time you will have to repay the debt.
Con – With chapter 13 bankruptcy, it may take you three to five years to pay back your debt.
Pro – Although you might need several years to pay your debt off, you can arrange for more time to make your payments. It might also be possible to negotiate for a flexible payment plan that reduces your payments or extends them. Once the plan is paid off, the creditors cannot come after you for the remainder owed.
You may have very little disposable income.
Con – After your necessary expenses have been paid, you may need to use your remaining money to pay off your debt.
Pro – You can typically keep your property and make payments on it.
You may damage your credit.
Con – When filing for Chapter 13, your credit may be affected for up to 10 years.
Pro – Although chapter 13 does affect your credit, any lawsuit, debt, foreclosure, default, or repossession can do the same. The latter could be more difficult to explain to a potential lender over a Chapter 13 bankruptcy that you are paying off.
You will be unable to take out a credit card.
Con – For the time being, you will very likely be unable to use or apply for a credit card.
Pro – It may benefit you from not having a credit card. Once you repay your debt, you might be able to get a credit card, but at a higher interest rate.
It may be difficult to get a mortgage.
Con – If you currently do not have a mortgage, it might be difficult to get one.
Pro – There are certain lenders who may help you to get a loan. If you are looking to buy a house, consider this option.
You cannot file for Chapter 7 after you file for Chapter 13.
Con – Once you file for chapter 13, you will need to wait 6 years to file for Chapter 7.
Pro – If your debt is discharged in Chapter 13, which means you have paid about 70% of your payments, the 6-year bar might be voided.
You must still pay your secured debt.
Con – If you owe student loans, child support, or alimony, you must pay this debt.
Pro – Without a court order that clearly states you do not have to pay this debt, you cannot avoid it.
If you would like to know more about Chapter 13 bankruptcy, please call a bankruptcy lawyer, like a Bankruptcy Law Firm Memphis, TN, to schedule a consultation today.
Thank you to the experts at Darrell Castle & Associates for their input into bankruptcy law.