The Pros and Cons of Chapter 13 Bankruptcy

chapter 13


  1. It gets the creditors off your back

Once you file for a Chapter 13 bankruptcy creditors are no longer allowed to call you. The calls can be annoying at the very least, and downright harassing. Calls at 8 a.m. while you’re on your way to work, or at 7 p.m. while you’re with your family or having dinner is nothing short of a nuisance. Chapter 13 eliminates that.

  1. You can keep your property

As long as payment is being made on the property that is causing the bankruptcy, the debtor is allowed to keep it. That means no one will be evicted or have their car repossessed.

  1. In a roundabout it looks better on your credit

A bankruptcy can have a negative impact on your credit for up to 10 years, however, it may look a lot better than having numerous liens and judgments against you.

  1. Alimony and Child Support Payments are Secured

Child support and alimony are secured debts. They can be restructured in the process, but they still have to be paid.


  1. Restructured payments can take up to five years to pay off

It may take you up to five years to repay your debt, meaning you may not be able to purchase any “big” items, such as a vehicle.

  1. All extra cash is tied into the Chapter 13

There are no luxuries. Any extra income accrued goes directly into paying off the debt. Basic necessities are met, but anything extra is up for grabs.

  1. No more credit cards

Credit cards are a huge reason so many people go into debt. Once Chapter 13 is filed, no more credit cards. Even after the debt has been settled, getting a credit card may be difficult. You will have to endure high-interest rates for a while.

  1. Student loans are not totally wiped clean

Student loans are considered secured debt, meaning they will not be eliminated. But, the payments can be restructured. However, you may be able to restructure payments without filing for a Chapter 13 bankruptcy.

  1. You have to admit your financial mistakes

It can be uncomfortable telling a virtual stranger your personal financial details. But every bankruptcy judge has probably heard every story under the sun. Their job is not to judge you, but to help you.

  1. It will be next to impossible to get a mortgage

Unless you already have a mortgage, it may be next to impossible to get one. Having a bankruptcy on your record does not bode well with financial institutions. Think long and hard before you get involved with one.

Thousands of people file for bankruptcies every year. There are many reasons why. Yes, it is uncomfortable and awkward to admit you’ve made some errors in your management of money, but a Chapter 13 attorney is not there to judge you, they are there to help you get organized and set your finances straight. It is nothing to be embarrassed about. Make sure you find an attorney who will make the process as seamless as possible.

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