Chapter 13 Bankruptcy: Should You Consider Filing?

Coming to a decision to file for Chapter 13 bankruptcy is a difficult thing for anyone in debt. It is hard to decide that you are ultimately unable to repay your debts. Not only is it difficult from an ethical perspective, but it can be challenging from a practical one. There are a lot of serious considerations that must go into deciding whether or not to file. One of your first decisions should be to contact a qualified attorney who can help you through the decision making process and guide you forward should you decide that filing is your best option. Here are some other factors you will have to consider.

Qualification

Before you decide whether or not you want to file for Chapter 13 bankruptcy, you need to determine if you even qualify. Not everyone does, to be sure. With this form of debt forgiveness, the individual has an opportunity to reorganize the debt and obtain a new payment schedule which is more amenable to the financial situation. It offers many advantages over Chapter 7, in that you can keep property that may otherwise be up for grabs. Steady income is a must in order to qualify for this option.

Process

Unlike other forms of filing, Chapter 13 bankruptcy puts the filer in the position of repaying the debt. Some of the debt may be forgiven in order to reach an agreement, but it doesn't just vanish into a puff of smoke. It can help to get rid of some of the excessive interest rates and find a more workable payment schedule. Debtors look to it when there seems to be little chance of paying the debt through traditional means. It is not necessary to obtain approval from the creditors, although secured creditors will have the opportunity to object on legal grounds. This objection, however, can be overruled by the court.

Downsides

Chapter 13 bankruptcy does have its downsides. Any form of bankruptcy will cause your credit to take a huge hit. It may be difficult to get a loan under reasonable terms for the next seven to ten years. This includes purchasing a car, a home, or opening credit cards. On the other hand, many people who find themselves in this situation already have ruined credit, so it may not matter. Attorney fees may also pile up when going through the filing process, which is something you'll have to consider, as filing on your own is unwise. Nevertheless, it doesn't make sense to drown in unpayable debt for the rest of your life, so you have to make the right choice for your financial future.