Things to Consider Before Filing Chapter 13 Bankruptcy
Filing for Chapter 13 bankruptcy should not be taken lightly. Although bankruptcy can help you get out of debt, it is not without its consequences. In addition, Chapter 13 bankruptcy still requires you to make regular payments to your creditors, which means you must be able to afford these payments.
If you are serious about filing for Chapter 13, you should educate yourself on how to file for bankruptcy and the consequences of reorganizing your debts. In addition, if you have any further bankruptcy questions, you should contact a knowledgeable consumer bankruptcy attorney.
Is Bankruptcy the Best Option?
Before you even consider whether Chapter 13 bankruptcy is the best option for you, you should first consider whether bankruptcy in general is right for you. After all, bankruptcy can leave a long-standing mark on your credit history, making it more difficult to secure loans and lower interest rates.
Here are some things to think about when considering bankruptcy:
- Are you currently able to pay more than your minimum payments on your bills? If so, bankruptcy might not be the best option.
- Have you suffered a major life crisis that has put you in financial turmoil, such as a divorce or an illness? If so, bankruptcy might be a good option.
- Are you able to pay off your debt within the next five years? If so, then Chapter 13 bankruptcy might be a good option for you.
Learn more about whether or not it is worse to have debt or to file bankruptcy.
Are You Earning a Steady Income?
Unlike Chapter 7, Chapter 13 bankruptcy requires you to have a steady income and some disposable income. This is because you are required to establish a debt repayment plan with Chapter 13.
The debt repayment plan calls for debtors-that's you-to pay a court-appointed trustee regularly. These payments are then distributed to creditors. If you make all your payments according to the plan, the court will discharge your debts.
Do You Want to Hold on to Your Belongings?
If you do not want to sell your belongings to help pay off your debts, then Chapter 13 bankruptcy might be right for you. Under Chapter 13, you do not have to give up your house, car, or other assets as long as you can make your scheduled payments on time.
Are You Planning on Chapter 13 Bankruptcy Again?
According to bankruptcy laws, you may not file for Chapter 13 bankruptcy twice within two years if your previous debts were discharged. If you are wanting to file Chapter 7 after filing Chapter 13 previously, you will have to wait four years.
Are You Eligible to File for Chapter 13?
Bankruptcy law establishes certain eligibility requirements for people wishing to file Chapter 13. Specifically, the amount of debt you have must be below a certain threshold. If it is above a certain limit, you may have to file for Chapter 11 bankruptcy.
To better understand your eligibility, talk with a Chapter 13 bankruptcy lawyer.
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