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Chapter 13 bankruptcy can help those with 5 years of payment left

Although in many aspects the economy appears to be improving, financial blows from the recent recession can still have a very real impact on those struggling with finances. California residents who lost jobs or even homes through no fault of their own may find that they are facing a mountain of debt that that may be slowly scaling, with no end in sight. In some instances, filing for Chapter 13 bankruptcy can prove to be a more appropriate option than a complete liquidation of their assets.

For instance, a 33-year-old working mother lost her job in 2009 due to the recession. Although she managed to continue making payments on her debt, it eats up nearly half of her monthly income. This includes payments for medical bills -- which are usually unavoidable -- as well as credit cards and loans.

Due to continuing to make payments, she has managed to maintain a favorable credit score, but has been unable to put any money at all into savings and, at the end of the month has no money left in her bank account. Sadly, this mother’s account is not at all uncommon. In some instances, those facing a similar plight might find that bankruptcy can help.

The pros and cons of filing for bankruptcy should be carefully weighed by any California individual who is considering bankruptcy, as it will affect a person’s credit score. However, when debts are eating up most or all of a person’s income and those payments will continue for longer than the next five years, Chapter 13 bankruptcy can effectively reorganize debt. Doing so can drastically reduce the amount of time and money needed for the satisfaction of debts.

Source:, "Money Talk: Consider Other Options Before Filing for Bankruptcy", Liz Weston, July 13, 2014

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