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Is Chapter 13 bankruptcy right for me?

Thousands of individuals across the country spend every day weighed down by the constant calls of creditors seeking to collect on debts. Finding a way to get ahead of the snowball of debt can seem impossible, but fortunately, there are often more options than you may realize. If you have been researching serious forms of bankruptcy, you may be wondering if a Chapter 13 bankruptcy is the right solution for your situation. Chapter 13 offers hope for many, when it is used wisely.

One the chief advantages of a Chapter 13 bankruptcy is that it allows for the debtor to keep a property that they are making payments towards. Under Chapter 13, the debtor agrees to a payment plan to creditors over a term of three to five years, in which time creditors are forbidden from engaging in collection tactics. This plan is created using only the debtor's expendable income, which means that your extra money is tied up on repayment after paying for essentials like rent and food. For those who are swimming in collection calls and notices, this can be a real lifeline.

Chapter 13 does have its drawbacks, however. While setting up a repayment plan will offer near-immediate relief from collections efforts, it will be an ongoing part of your life for at least three years. It will also not discharge all or even most of your debt, depending on the terms of the plan. Furthermore, utilizing Chapter 13 can disqualify an individual from filing for other forms of bankruptcy later on.

Bankruptcy is never an easy or desirable choice, but it is sometimes the best of several unpleasant options. As with any bankruptcy, it is highly inadvisable for anyone to rush into such a decision. If you believe that Chapter 13, or any other form of bankruptcy may be the best solution for your difficulties, the guidance of an experienced attorney can help take all the necessary steps to move forward with well-informed confidence.

Source: Findlaw, "Pros and Cons of Declaring Bankruptcy under Chapter 13," accessed Nov. 01, 2016

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Thomas F. Miles, Attorney and Counselor at Law
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