If you are an individual hoping to find a solution for your overwhelming debt, you’re likely considering the possibility of filing bankruptcy. And while Chapter 7 bankruptcy is by far the most popular type of bankruptcy, you might be wondering whether the alternative — a Chapter 13 bankruptcy — would serve you better.
But are you really making the right decision by seeking out Chapter 13 bankruptcy help? Here are the biggest pros and cons of the Chapter 13 bankruptcy timeline that you absolutely need to know:
Pro: Chapter 13 bankruptcy allows you to repay your debts
Many people feel uncomfortable with the idea of casting off their debt and never paying it back, which is what happens in a Chapter 7 bankruptcy. In contrast, Chapter 13 bankruptcy helps you fulfill any moral obligation you may have by allowing you to pay back your debts according to a court-approved repayment plan. These bankruptcies often allow flexible repayment terms, giving you a plan that works for your income and finances.
Con: It can be several years before you’re finished with your bankruptcy
Unlike a Chapter 7 bankruptcy, which usually just takes six months or so to complete, it can take as much as five years for you to finish the repayment plan set up in your Chapter 13 bankruptcy. If you don’t want to spend that much time going through a bankruptcy, you might be better off filing Chapter 7 instead.
Pro: You get to hold on to your property
One of the major drawbacks of Chapter 7 bankruptcy is the fact that filers must surrender most of their assets and property to the court in order to repay the debt they’re discharging. However, since you will be repaying your debt in a Chapter 13 bankruptcy, you won’t have to give up any of your property or belongings.
Con: A Chapter 13 bankruptcy will cripple your credit — at first
Chapter 13 bankruptcy helps you recover financially, but at a price — it will remain on your credit report for 10 years after you file bankruptcy, making it extremely difficult to be approved for credit and loans at first. However, with good financial habits and on-time payments, it’s very possible for you to rebuild your credit score in time.
Want to know even more about getting help with filing bankruptcy with a Chapter 13 bankruptcy attorney? Ask us anything about the bankruptcy process in the comments below this article. To learn more, read this.