Will Chapter 13 Bankruptcy Make Your Financial Situation Better or Worse?
The federal Bankruptcy Code includes many different categories for bankruptcy filings, but most individuals who file for bankruptcy protection use chapter 7 or chapter 13. Which category should you choose? The Google snippet answer is that, if you have a steady income and own assets beyond the bare necessities, you should file for chapter 13 bankruptcy, but if your assets are so modest that all of your property is exempt from liquidation, chapter 7 is a better choice, especially if you are out of the workforce because of your age or disability. While this advice makes sense, deciding which bankruptcy category to choose is an individual choice, and when you meet with a bankruptcy lawyer to make plans to file, he or she will go over the scenarios of how a chapter 7 or chapter 13 filing will affect your finances in the short term and over the next few years. For help making informed decisions about your bankruptcy case, contact a Miami chapter 13 bankruptcy lawyer.
Filing for Chapter 13 Bankruptcy Makes the Rich Richer and the Poor Poorer
In a chapter 13 bankruptcy case, you do not get immediate debt relief, but there is little to no risk of the court liquidating your assets. If your filing is successful, the court sets up a debt repayment plan that lasts for three to five years, based on the amount that you can reasonably afford to pay per month. After you pay the final installment, the court discharges the remaining balance of your debts. Chapter 13 is an obvious choice if you have employment income and therefore are in a position to abide by a court-ordered repayment plan. It is also appealing to gainfully employed people because it protects their assets from liquidation.
If your income is not enough to pay some to creditors each month and have some left for yourself, chapter 13 bankruptcy is risky. If you cannot keep up with your repayment plan, the court can dismiss your case, leaving you responsible for all the debts you owed before you filed. It also has the right to convert your chapter 13 case to chapter 7, putting your assets at risk of liquidation.
You Know You Are Middle Class If You Can Afford Chapter 7 Bankruptcy
In Southern states like Florida, where laws about risky lending and consumer-unfriendly business practices are more lenient, chapter 13 cases account for about 70 percent of all bankruptcy filings, and only about half of these cases are successful. This is because the legal fees are higher for chapter 13 cases, and lawyers do not have to worry that the bankruptcy court will discharge the client’s legal fees before the lawyer gets paid. If you file for chapter 13 bankruptcy, make sure you are doing it for the right reasons.
Work With a Debt Lawyer About Making Wise Bankruptcy Filing Decisions
A South Florida debt lawyer will keep your best interests in mind when advising you on your bankruptcy case. Contact Nowack & Olson, PLLC in Jupiter, Florida to discuss your case.
Source:
projects.propublica.org/graphics/bankruptcy-chapter-13
