If you’re struggling with debt despite earning a decent living, you may benefit from filing for Chapter 13 bankruptcy. This opportunity will allow you to reorganize your debt so that paying it off is a more manageable process. As a bonus, you’ll receive a discharge of your qualifying unsecured debts at the end of a successful repayment period.
Chapter 13 bankruptcy isn’t usually a good option for individuals who don’t earn much income. These individuals generally benefit more significantly from filing for Chapter 7 bankruptcy. Yet, even low-wage earners may benefit from this process if they own a lot of luxury property or are hoping to save their home from foreclosure.
Primary benefits
The automatic stay that will go into effect when you file your paperwork will halt most – if not all – collections actions against you. If you’re facing foreclosure, wage garnishment, repossession and/or lawsuits related to your debt, filing for Chapter 13 should halt these actions long enough that you can regain your financial footing.
Primary drawbacks
There are some drawbacks to the Chapter 13 bankruptcy process that you should be aware of before committing to this opportunity. First, you’ll be required to make your repayment installments on time for 3 to 5 years before you’ll receive a discharge of your remaining eligible debt balances. This is a big commitment. Additionally, filing for bankruptcy will result in a temporary hit on your credit history. While many filers discover that the benefits of the process outweigh its drawbacks, only you can know if it will work for you.
Moving forward
By understanding the benefits and potential drawbacks of the Chapter 13 bankruptcy process, you’ll be able to effectively evaluate whether seeking this form of debt relief is in your best interests at this time. If you do choose to move forward with the Chapter 13 bankruptcy process, you’ll want to seek legal guidance right away so that you can start constructing a repayment plan that will be manageable for you and your family. Also, the quicker you act, the quicker the automatic stay will go into effect, so don’t delay.
