Chapter 13 Bankruptcy

Bankruptcy, whether you're talking about Chapter 13 or other options, is not a debt resolution strategy that should be taken lightly. In many cases, and with the right professional guidance and help, Chapter 13 is an avenue that can be avoided. Our law firm focuses on helping clients implement less drastic measures than filing a Chapter 13 bankruptcy, such as debt consolidation programs.

Although we'll review and discuss Chapter 13 bankruptcy options with you if you're considering it, we strongly believe that it's a solution of last resort. Our debt consolidation program is generally a much better choice for most people than Chapter 13 because it will solve a number of problems without creating new ones. Chapter 13 bankruptcy is often though of as a "quick fix" to a host of financial and personal problems, but quick fixes don't always represent the best solutions, especially when it comes to consumer debt.

It's important to recognize that while Chapter 13 can get rid of unsecured debts, stop foreclosure proceedings, and put a halt to debt collection activity, it does come with a steep price. Some people view the disadvantages as an acceptable tradeoff, but, in reality, filing Chapter 13 can undermine your financial wellbeing for the foreseeable future and beyond. A Chapter 13 bankruptcy will tarnish your credit report for ten years, making it extremely difficult to get approved for a mortgage, a car loan, or virtually any other line of credit. Having a Chapter 13 on your record could also potentially interfere with your ability to get hired for certain jobs or even obtain life insurance. Some state licenses are also unavailable to people who have filed for Chapter 13 bankruptcy. Depending on your goals for the next decade, a Chapter 13 filing can result in years of frustration.

F.Y.I.: The two basic forms of personal bankruptcy are Chapter 13 and Chapter 7. Filing bankruptcy under Chapter 13 can potentially enable a person to keep a mortgaged house or car on which they've defaulted, provided they have a steady income and are willing to comply with a three to five year court approved repayment plan. Filing under Chapter 13 does not, by any means, guarantee that you will be allowed to keep your house, though. If an acceptable plan to catch up on your debts is not agreed upon, Chapter 13 may not allow you to keep your property. If the bank or financing company has an unpaid mortgage or lien on the property, and they have reason to believe that their prospects for recouping their funds are slim, Chapter 13 may not be an effective shield against having to give up your home.

Although neither is desirable, Chapter 13 may be considered less severe than Chapter 7. Unlike Chapter 13, Chapter 7 involves liquidation of all non-exempt assets and is referred to as "straight bankruptcy". Chapter 13 is far from a "cure all" remedy, however, and will probably require you to stick with a court imposed repayment plan. As a point of information, personal bankruptcy plans, such as Chapter 13, usually do not wipe out child support obligations, alimony, fines, or taxes. Chapter 13 and Chapter 7 bankruptcy proceedings will also not excuse you from some student loan obligations.

Another factor to keep in mind in regard to Chapter 13 and Chapter 7 are the fees that must be filed in federal bankruptcy court. In addition to attorney fees, the court filing fees for Chapter 13 and Chapter 7 are around $185 and $200, respectively. In the case of Chapter 13 bankruptcy filings, the individual declaring bankruptcy receives a discharge of their debts after all the payments under the plan have been made.

The objectives that both types of bankruptcies (Chapter 13 and Chapter 7) are usually able to accomplish include wiping out unsecured debts, stopping foreclosures, ending garnishments, putting a halt to repossessions, avoiding or reversing utility shut-offs, and blocking further debt collection phone calls, ultimatums, and threats. Chapter 13 (and 7) provides exemptions that may allow filers to keep certain assets, but there are a lot of variables and it depends on individual circumstances.

Unless you feel that your financial situation leaves you no other choice, declaring Chapter 13 bankruptcy (or Chapter7) can and should be avoided if at all possible. While it's true that Chapter 13 may give people who can't satisfy their debts a "fresh start", the repercussions of such a decision will keep resurfacing for years to come. For additional information on Chapter 13, as well as the more desirable alternative of a customized debt consolidation plan that we offer, use the contact information or email forms on this site.

Whether you've made up your mind to pursue a Chapter 13 solution or the less drastic debt consolidation approach, the two most important resources you need in order to go forward are information and legal advice. The fact that you've begun actively researching Chapter 13 and other alternatives is a good beginning. To make a truly informed decision that will serve your best interests, both now and in the long term, contact us for a professional opinion regarding Chapter 13, debt consolidation, and other legal options available to you.