The Benefits Of Filing For Chapter 13 Bankruptcy
Chapter 13 bankruptcy is an option available to Ohio consumers who can't afford to pay all of their outstanding debts. This option offers several advantages to consumers, but there are drawbacks to Chapter 13 as well.
Two main types of bankruptcy are available to consumers who have accumulated more debt than they can repay: Chapter 7 bankruptcy and Chapter 13 bankruptcy. Chapter 7 bankruptcy, which may also be called "liquidation," requires consumers to surrender all of their non-exempt property to the court to cover as much of their debts as possible. After the proceeds of the liquidation are spent, the court will discharge the remaining debts, and the consumer is no longer responsible for paying them.
Chapter 13 bankruptcy, on the other hand, doesn't always require consumers to surrender any of their property. Instead, consumers who opt for Chapter 13 bankruptcy will repay their debts according to a payment plan approved by the court. Under Chapter 13, you must pay certain debts in full.Pros of Chapter 13 Bankruptcy
Some of the advantages of filing Chapter 13 bankruptcy include:
- No need to surrender assets - If you choose Chapter 13 bankruptcy, you don't have to worry about surrendering may not have to surrender any of your property to pay your debts.
- Less time on your credit report - Chapter 13 bankruptcy will appear on your credit report for a maximum of seven years. That is three years less than the maximum reporting time for Chapter 7 bankruptcy.
- Better for your credit - Because cancellation of debts without any payment to creditors is unlikely under Chapter 13 bankruptcy, your credit won't suffer as much from this type of bankruptcy as it would with Chapter 7.
Some of the disadvantages of Chapter 13 bankruptcy include:
- More money spent - Because Chapter 13 bankruptcy requires you to pay as much toward your debts as you can over three to five years, you will be required to pay a larger proportion of your debts overall than you would with Chapter 7 bankruptcy.
- Lengthy process - Chapter 13 bankruptcy cases require you to make payments over several years.
Choosing between Chapter 7 and Chapter 13 bankruptcy requires careful consideration. However, it is also important to note that some consumers may not have a choice in the matter. In order to file Chapter 7 bankruptcy, you must pass a means test. This test is designed to determine whether your current income is low enough to qualify for Chapter 7. If you don't pass this test, you may have to file Chapter 13 instead. In some cases, consumers aren't able to complete their payment plans while under Chapter 13 bankruptcy. If this occurs, you may be able to convert your case to Chapter 7.
If you are thinking about filing for bankruptcy, it's best to contact a lawyer who has experience with these cases. A bankruptcy lawyer will be able to help you decide which type of bankruptcy is best and help you to complete it successfully.
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