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Is Chapter 13 Bankruptcy Right For Me?

You’ve made the decision to file for bankruptcy. However, you’re not sure if you should file for Chapter 7 or Chapter 13. This blog will discuss Chapter 13 bankruptcy and its pros and cons.

If you have a regular income with an ability to repay at least a portion of your debts, or you have a lot of assets, Chapter 13 may be more suited to you than Chapter 7.  To be eligible for Chapter 13 bankruptcy, you should have regular income, plus income left over to pay for things like food and utilities. The focus of Chapter 13 is a repayment plan for debts. The payment plan is typically 36-60 months in duration, depending on your income and ability to fund the plan.

Once you file for Chapter 13, your creditors must stop all collection efforts against you, including foreclosure. This is called “automatic stay” and can give you immediate relief from collection proceedings including, among other things, foreclosure, repossessions, collection calls from creditors, collection letters, and lawsuits. Chapter 13 lets you keep your property and pay off your debts over time, usually three to five years. After submitting a proposed payment plan to the court, you make monthly payments to a trustee, who in turn will pay your creditors. At the end of the plan, your remaining debts, with some exceptions, are discharged, and you are financially free and clear.

Pros of Chapter 13:

  • Avoids wage garnishment, lawsuits, and all collection activity against you
  • Stops foreclosure and gives you a chance to catch up over time
  • Can get relief more often (no eight-year prohibition from filing another case)
  • Can extend payment terms on debts
  • Can lower the amount owed on secured debts like automobiles
  • Sometimes can even strip off junior mortgages depending on value of the house

Cons of Chapter 13:

  • Stays on credit report for seven years, after completed
  • Not all debts are discharged
  • Must make payments to creditors instead of wiping them out like in a chapter 7
  • Fees are typically higher than chapter 7

Call us toll-free today at 1-800-260-1402 for your complimentary initial bankruptcy consultation or visit one of our 100 offices across the United States. You can also read our many informative articles on our website, www.maceybankruptcylaw.com.  For the best advice on filing for Chapter 7 or Chapter 13 bankruptcy protection, trust the experienced and caring attorneys at Jacoby & Meyers Bankruptcy Law.

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