If you find yourself swimming in debt and unable to make any progress, Chapter 13 bankruptcy may be one of the best ways to escape trouble and get your finances back on track.
Before you pull the trigger, you’ll want to better understand the potential pitfalls of Chapter 13 bankruptcy. Here are a few things to keep in mind:
- It can take three to five years to repay some or all of your debts through a Chapter 13 bankruptcy repayment plan
- You don’t get to keep all your disposable income, as it will go toward satisfying debts through your repayment plan
- A Chapter 13 bankruptcy can remain on your credit report for as long as 10 years, thus making it difficult to secure credit during that time
- If you’ve filed for Chapter 13 bankruptcy in the last six years you are unable to file for Chapter 7
- Chapter 13 bankruptcy does not have any impact on child support payments, alimony or student loan debt
- After filing for Chapter 13 bankruptcy, it’s more difficult to secure a loan to purchase a home or vehicle
It’s critical to compare the pros and cons of Chapter 13 bankruptcy, which should give you a better idea of how to proceed.
If you find that the benefits outweigh these potential downfalls, now may be a good time to take action. Conversely, if you’re concerned about the downfalls and would rather look into other options, you can do that as well.
As long as you understand the finer details of Chapter 13 bankruptcy, including the impact on your finances now and in the future, you should have everything you need to make a decision.