Deciding whether to file for Chapter 7 or Chapter 13 bankruptcy is difficult enough without having to wade through various myths to see if there is any truth to them. Unfortunately, falsehoods about both types of bankruptcy persist that make the process more challenging than it needs to be. In this blog, Georgia bankruptcy attorneys Clark & Washington provide factual information to counter some of the most persistent myths about Chapter 7 and Chapter 13 bankruptcy.
Two Things About Chapter 7 Bankruptcy That Are Just Not True
You know that you meet the requirements to file for Chapter 7 bankruptcy in Georgia and have most of your debts discharged. However, you have concerns about things you have read online or heard from others.
One especially common misperception is that filing for Chapter 7 bankruptcy will permanently ruin your credit. While it is true that the bankruptcy filing will remain on your credit report for 10 years, not all creditors view a recent filing as negative. Some may be willing to extend you a small credit line knowing that you cannot file for bankruptcy again for several years. If you start small and always repay your loans on time, you can eventually rebuild your credit and earn a higher credit score.
You could also feel concerned about losing your home or car in bankruptcy proceedings. This will not happen because Georgia bankruptcy laws allow for several exemptions. The law recognizes that you must have a place to live and a way to get to work, as well as maintain several other assets. Bankruptcy actually protects your assets from creditor lawsuits, whereas you could lose major assets if a creditor obtains a judgment against you.
Two Persistent Myths About Chapter 13 Bankruptcy
Chapter 13 bankruptcy gives petitioners three to five years to repay their creditors by making one affordable monthly payment to the bankruptcy court. Because Chapter 13 does not discharge most debts as Chapter 7 does, people often assume that filing for this type of bankruptcy means they must repay all outstanding debts. That is usually not the case.
The amount of debt you need to repay with a Chapter 13 bankruptcy petition depends on several criteria. Three critical factors that bankruptcy judges consider are how much disposable income you have available to you each month, the value of your assets, and fixed monthly expenses you must pay. Some Chapter 13 bankruptcy filers end up paying little towards unsecured debt like credit cards and medical debt depending on their personal circumstances.
Another common misperception about Chapter 13 is that it is inflexible and bankruptcy trustees have complete control over the petitioner’s life. You are free to request a change to your payment plan if your situation changes after the court has approved a three to five-year repayment plan. You should have no further dealings with the bankruptcy trustee as long as you continue to submit your payment for disbursement to creditors each month.
Request Your Free Bankruptcy Consultation Today
Clark & Washington maintains 11 bankruptcy offices throughout Georgia for your convenience. We invite you to contact the location nearest you to take advantage of a free consultation and learn more about whether Chapter 7 or Chapter 13 bankruptcy is right for you.