Deciding whether Chapter 13 bankruptcy is the right option requires careful consideration of specific financial situations and goals.
LEXINGTON, KY, September 26, 2023 /24-7PressRelease/ — Chapter 13 bankruptcy is a type of bankruptcy that allows individuals with regular income to develop a plan to repay all or a portion of their debts over a three- to five-year period. This is different from Chapter 7 bankruptcy, which is designed for individuals with little or no income and few assets and does not involve a repayment plan.
Here are some advantages and disadvantages of Chapter 13 bankruptcy:
Advantages:
1. Debt repayment plan: One of the significant advantages of Chapter 13 bankruptcy is that it allows the debtor to develop a debt repayment plan that fits their income and expenses. This plan can help debtors to pay off their debts over a reasonable period and avoid losing their assets, such as their home or car.
2. Protection from creditors: Chapter 13 bankruptcy provides an automatic stay, which stops creditors from taking any collection action against the debtor. This includes foreclosure, wage garnishment, and debt collection calls.
3. Debt discharge: At the end of the repayment period, some debts may be discharged, which means the debtor is no longer liable to pay them.
4. Lower payments: Chapter 13 bankruptcy may lower the monthly payments on some debts, making them more manageable.
5. Retain property: Debtors can keep their property, such as their home and car, as long as they keep up with the payments.
Disadvantages:
1. Time-consuming process: The Chapter 13 bankruptcy process can take several years, and the debtor must make regular payments throughout this period.
2. Limited eligibility: Not everyone can file for Chapter 13 bankruptcy. Debtors must have a regular income and unsecured debts below a certain limit.
3. Potential loss of property: If the debtor fails to make the payments, they may lose their assets, including their home or car.
4. Credit impact: Filing for bankruptcy can negatively affect a person’s credit score and may make it challenging to obtain credit in the future.
“Many people mistakenly believe that filing for bankruptcy means they will lose all of their assets. In fact, the opposite is true. Bankruptcy is a way to protect your money and property from aggressive creditors who can use the courts to seize your possessions,” says Bunch.
About Bunch and Brock, Attorneys at Law
In 2016, Bunch & Brock, Attorneys at Law celebrated our fortieth anniversary as a law firm providing professional, quality legal advice and representation to families, individuals, and businesses in central Kentucky. We help clients navigate bankruptcy, estate planning, wills, and trusts, and we provide advice on how to avoid foreclosure. Contact us at 859-254-5522.
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