Deciding to undergo bankruptcy is a big decision, but one that will make you more financially stable in the long run. However, when it comes to Chapter 13 bankruptcy
, you may wonder what the benefits are. At The Jones Law Firm, we know there are many myths surrounding the bankruptcy process, which is why we wanted to break down the pros and cons of Chapter 13 bankruptcy for you.
Pros of Chapter 13 Bankruptcy
If you are just starting out your bankruptcy research, you’ll want to take a look at the advantages and disadvantages of filing a Chapter 13 bankruptcy. The following are pros to Chapter 13.
- 1. You have more time to make your payments. Many people want to repay part of their debts, and Chapter 13 bankruptcy allows you to do it. Your payment plan can be stretched out over the course of three to five years and with your bankruptcy trustee, you can navigate the amounts should life events occur that make payments difficult. And, once you fulfill your Chapter 13 obligations, creditors cannot make you pay them back in full.
- 2. No repossession. No foreclosure. So long as you are making your monthly payments, you get to keep your property you are paying on.
- 3. Start rebuilding credit immediately. Though your credit score suffers, you begin the process of rebuilding as you start your monthly payments.
Cons of Chapter 13 Bankruptcy
While there are obvious perks to Chapter 13 bankruptcy, there are some disadvantages that you should be aware of.
- 1. Support payments still need to be made. Just like Chapter 7, you must pay off alimony and child support payments.
- 2. You can’t file for Chapter 7. If you have declared Chapter 13 within the last six years, you won’t be able to file for Chapter 7 should you fall on hard times. Even if you make it past the six years, it can still be difficult, though not impossible, to file Chapter 7 in the future.
- 3. Debts are paid out of disposable income. Once you calculate your monthly income and deduct necessities, the remainder is what is used to pay off your debts. This makes it difficult to save should you need emergency funds. But, you can modify your payments should something occur out of your control like a change in employment, the birth of a child, necessary repair to a household appliance, etc.
What is important to remember in navigating the pros and cons of Chapter 13 bankruptcy is what is your long-term financial goal. If you are hoping to catch up on debts after a major life change caused you to fall behind, or if you just need structure, Chapter 13 is likely for you.
Navigate the Pros and Cons of Bankruptcy With The Jones Law Firm
If you have questions about whether Chapter 13 bankruptcy is right for you, we encourage you to contact The Jones Law Firm
for a free consultation about how we can help. With offices in Reynoldsburg, Ohio, The Jones Law Firm works with clients in and around Columbus, Ohio, and throughout the Franklin County area.