Filing for bankruptcy is far from an easy decision. Bankruptcy can stay on your record for a while, and the consequences can take a long time to recover from. It can be difficult to apply for new loans and your credit score may suffer in the short-term. However, bankruptcy allows you to start over for a financial fresh start. Chapter 13 is a common type of bankruptcy that people file for, as a bankruptcy lawyer like one from The Law Offices of Neil Crane can tell you. Before you commit to filing for Chapter 13 bankruptcy here are some things that you should know.
How Do I Know if I’m Eligible?
There are a few eligibility requirements that individuals must meet to file for Chapter 13 bankruptcy. First of all, only individuals can file for this type of bankruptcy, unlike Chapter 7 where both individuals and businesses may apply. Individuals intending to file must make sure their amount of secured or unsecured debt is under the defined amount. If you are not sure if you are eligible, you can discuss your situation with a lawyer who can go over the eligibility requirements with you in more detail.
What Are the Benefits of Chapter 13 Bankruptcy?
Some of the main benefits of Chapter 13 bankruptcy is that it allows you to reorganize your debt, keep your home, and allows you to get rid of some secured liens. Individuals can pay back all or a portion of their debt through repayment plans. Chapter 13 also stops home foreclosure by enacting an automatic stay, even up to the days just before foreclosure is set to occur. If you would like to make your mortgage more manageable, you can have it modified.
What Are the Drawbacks of Chapter 13 Bankruptcy?
Unlike Chapter 7 bankruptcy, which generally can be completed in as little as three to four months, Chapter 13 bankruptcy may take you years to complete. Individuals must pay a trustee monthly payments for about three to five years, and a part of their unsecured debts must be paid back. They must not miss a payment at any time.
Chapter 13 bankruptcy involves more complexities than Chapter 7, so you should take the time to understand if it is really right for you. Contact a trusted and respected bankruptcy lawyer today who can provide you with further legal and financial assistance.