If you are struggling under debts you can’t pay, you may be considering bankruptcy. Most consumers will use either Chapter 7 or Chapter 13 bankruptcy to eliminate their debts.

Below are some of the pros and cons of choosing Chapter 13 bankruptcy.

Chapter 13 Pros

Some of the advantages of filing Chapter 13 bankruptcy include:chapter 13 bankruptcy pros cons

  • More affordable payments – When you file Chapter 13 bankruptcy, you will be able to pay your debts over time in smaller installments you can afford. The payments you make will be based on your disposable income only, so you won’t have to worry about running out of money for necessities.
  • Keeping your property – Unlike Chapter 7, which requires you to surrender all of your non-exempt assets, Chapter 13 allows you to keep your assets as long as you are making your payments.
  • Relief from debt collection – As soon as you file for bankruptcy protection, an automatic stay goes into effect to prevent creditors from continuing to take collection action against you, such as wage garnishment.

Chapter 13 Cons

Some of the disadvantages of filing Chapter 13 bankruptcy include:

  • A longer time to discharge – Chapter 13 bankruptcy can take many years to complete. The total time to completion is typically much longer than for Chapter 7 bankruptcy.
  • Damage to your credit – Filing any type of bankruptcy, including Chapter 13, will damage your credit. This makes it more difficult for you to qualify for mortgages, credit cards and other loans. The bankruptcy will remain on your credit report for up to 10 years.
  • More difficult to declare Chapter 7 – Declaring Chapter 13 bankruptcy may make it harder to declare Chapter 7 bankruptcy in the future.

Should You File Chapter 13 Bankruptcy?

Every individual’s situation is different. Deciding whether to file Chapter 13 bankruptcy can be difficult, and it is important to consider your options carefully before you proceed. The best way to determine whether Chapter 13 bankruptcy could be the right course of action for you is to discuss your situation with a qualified bankruptcy attorney.

Clark & Washington, LLC has been helping clients with Chapter 13 bankruptcy for many years. If you are interested in this bankruptcy option, we will be happy to review your situation and provide customized advice. If you decide to move forward, we will guide you through the process.