Are there potential disadvantages of Chapter 13 bankruptcy?
If you’re considering a Chapter 13 bankruptcy filing, you’ll want to compare the pros and cons to ensure that it’s the best decision for you and your finances at the present time.
Although there are many benefits of Chapter 13 bankruptcy, such as the ability to keep most or all of your assets, there are some potential disadvantages. These include:
The Chapter 13 bankruptcy repayment plan: Unlike Chapter 7 bankruptcy, you’re expected to repay some or all of your debts through a repayment plan that lasts anywhere from three to five years. This debt is paid with any disposable income.
The impact on your credit report: Since a Chapter 13 bankruptcy will remain on your credit report for 10 years, you will find it difficult to secure loans in the future. However, as the years go by, you’ll be able to take steps to improve your credit score and eventually qualify for many types of loans and credit cards.
Doesn’t relieve you of all your debts: Chapter 13 bankruptcy has no impact on child support, alimony, student loans and back taxes. You’re still required to pay all of these things, even after you file for bankruptcy.
Although there are potential drawbacks of Chapter 13 bankruptcy, it’s important to note that these are typically outweighed by the benefits. As long as you compare the pros and cons, you’re in a position to make an informed decision.
If you decide that a Chapter 13 bankruptcy will help you escape your financial nightmare, don’t wait to learn more about your legal rights and how to start the process.