The Downside of Chapter 13 Bankruptcy
If you are considering filing for Chapter 13 bankruptcy or making any major decision about your financial situation, it helps to look carefully at the advantages and disadvantages of your choices. RGG Law can help you weigh them and therefore help you decide which course of action might suit you best. Whatever your reasons for filing bankruptcy, we are here to help.
In this blog entry, we are going to look at Chapter 13 bankruptcy, starting with the potential disadvantages of the process. Keep in mind that these may not be major obstacles for some, and this avenue also has its benefits, which we will examine in our follow-up entry. In the meantime, let us guide you on some of the things we think you should be aware of.
It Takes Time
One of the biggest disadvantages of Chapter 13 bankruptcy is the amount of time the process takes, usually lasting three to five years altogether. In financial terms, especially if you are looking to improve your financial situation, this is a long time. During this three to five year period, your current income at the time will be tied up during this entire period, and the length of time you are still in debt will increase until your Chapter 13 process is over. If you value having disposable income, be ready to give up having any during this period.
It Can Cost More
Due to the relative complexity of a Chapter 13 claim, depending on the lawyer, attorney or law firm you use, it can also be more expensive. This is certainly an important factor to consider when you are applying to reduce a financial burden.
Your Credit Score
As we have already said, three to five years is a long time. In that time, you may find your feet beginning to itch, and a desire to move house. However, getting a mortgage while you are still in that Chapter 13 timespan can be virtually impossible, not to mention the hit your credit history takes once the process is over. A Chapter 13 bankruptcy will remain on your credit history for years, so answering questions about it is something you will need to be ready for.
With Enough Debt, You Might Not Qualify
In some cases, the sheer amount of debt someone has may render them ineligible for filing for a particular type of bankruptcy. One of those types is Chapter 13. If your debt exceeds $336,900 in unsecured, or $1,010,650 in secured debt.
The RGG Law Chapter 13 Bankruptcy Advantage
Although it seems bleak from reading these disadvantages, there are advantages to choosing Chapter 13 bankruptcy if you are overwhelmed with debt. RGG Law will be covering these advantages in an upcoming blog. In the meantime, if you need advice or guidance, or you have any questions about Chapter 13 or Chapter 7 bankruptcy, contact RGG Law today for a free consultation.