If you are like many people struggling with overwhelming debt in Tennessee, then you have likely considered bankruptcy. With several filing options available, it can be difficult to know which one is best suited for your situation. At Rothschild & Ausbrooks, PLLC, we are often asked how to know if filing for Chapter 13 bankruptcy is right for you. In this post, we will discuss the benefits and disadvantages of Chapter 13.
Through a Chapter 13 filing, you will propose a plan to repay all or a part of your debts. As such, you are not typically required to liquidate certain assets like other options require. One such asset that may be lost in some bankruptcy filings is your home. Through a Chapter 13 filing, however, you may be able to stop foreclosure proceedings, according to the U.S. Courts. This means that you may be able to keep your home if you can make the regular mortgage payments that come due over the course of your Chapter 13 plan. Another advantage of this type of filing is that you may be able to reschedule some secured debts. By extending your payments over the life of your plan, it may lower the amounts you are required to pay each month. Since your plan payments are made to a trustee, you will not have to have direct contact with your creditors while your plan is in effect.
One of the biggest disadvantages of filing for Chapter 13 protection is that it can take between three and five years to complete your repayment plan. During this time, you are required to make your plan payments. Since these payments must be made out of your disposable income, all of your extra income is typically tied up over the course of your repayment plan. While seeking Chapter 13 protection can help you regain control of your finances, a bankruptcy filing can stay on your credit report for up to 10 years.
For more information about Chapter 13 bankruptcy, please visit our types of bankruptcies page.