If you find yourself in financial trouble, it may not be long before you learn more about Chapter 13 bankruptcy.
There are many benefits of filing for Chapter 13 bankruptcy, including the opportunity to stop foreclosure and reorganize some of your debt.
Before you move forward, it would be in your best interest to compare the pros and cons. In other words, despite the many benefits, there are some drawbacks associated with this form of bankruptcy. Here are a few things you'll want to keep in mind:
- A Chapter 13 bankruptcy filing can remain on your credit report for up to 10 years. With this lingering, it can be a challenge to secure a loan, such as one for a home or car.
- A Chapter 13 bankruptcy repayment plan can remain in place for as long as five years. This can be a hassle if you're the type of consumer who wants to file for bankruptcy as a means of getting a fresh start, sooner rather than later.
- You don't get to keep all your future income. Since you're repaying some of your debts through a repayment plan, you won't get to keep all the money you earn.
- You will lose your credit cards. This may not be a big deal, especially if you know that credit cards caused you trouble in the first place, but it's something to consider nonetheless.
- If you file for Chapter 13 bankruptcy today it will make it more difficult to file for Chapter 7 in the near future. You don't want to jump the gun by doing something that could have a negative impact on your finances down the road.
- Chapter 13 bankruptcy does not get rid of all your debts. For example, this won't have any effect on your student loan debt or child support obligations.
Even though there are potential drawbacks of Chapter 13 bankruptcy, most consumers find that they don't outweigh the many benefits.
As you learn more about the pros and cons, you can decide if Chapter 13 bankruptcy is right for you. If it is, you can then learn more about the process, your legal rights as a consumer and what you can do to improve your situation as quickly as possible.