Should I File Chapter 13 Bankruptcy?

A Chapter 13 bankruptcy is a repayment plan that allows a consumer to restructure debt over an organized plan.  It’s an effective plan for people who are seeking to take care of a variety of debts, such as income taxes and parking tickets.  However, it’s important to consider a few things before entering into a Chapter 13 bankruptcy.

 

  1. Can I afford it?  It is important to remember that a Chapter 13 bankruptcy is a repayment plan.  While generally it is based off your income and expenses, the Trustee, the representative for your creditors, will demand proof of expenses if they are not happy with the plan.  This may result in a higher plan payment.  Not only is it important to have an experienced advocate in your corner, but you must go into it with the understanding that it is a payment plan.  You must be confident in your stability.  Is your job stable?  Do you like it or are you going to move on in three months?  Stability is a cornerstone of Chapter 13 bankruptcies and must be taken into consideration before filing;
  2. Do I have Other Options?  Chapter 13 is an effective option for some situation; however, for others, it may not be the best option.  If you’ve received a Chapter 7 discharge within the last four years, it is important to discuss the matter with an attorney before filing a Chapter 13.  Why?  Your Chapter 13 may not be eligible for a discharge.  Essentially, it’s not a 13 at “full strength.”  The bottom line is that you will owe money after the 13.  On the other hand, is there a refinancing option?  What about negotiations?  It is important to explore all options before entering into a commitment like a Chapter 13 bankruptcy;
  3. Is it Worth it?  Note that filing a Chapter 13 bankruptcy may afford you immediate relief (you can get your car back or stop a sheriff’s sale); however, it may be more than you bargained for.  The most obvious consequence of a Chapter 13 repayment plan is that you have just entered into a monthly repayment plan.  What happens if there is an unforeseen emergency, like a job loss or significant repair on the house or car? Unfortunately, the plan is unrelenting and does not afford for emergencies.  That is why it is important to evaluate the strength of your income before going into a Chapter 13. In addition, the condition of the collateral must be taken into account.  Is it worth saving a vehicle that will need $10,000 in repairs over the next three years?  If the foundation of the house is sinking into the ground, do you have the funds to be able to remedy the situation?  Consider the sacrifices that you will have to make over the next three to five years and determine if it is really worth it. 

 

Call SLF, LLC at (312) 620-6499 TODAY for ALL of your Options

For more considerations, talk to an experienced attorney who practices in your area.  The attorneys at the Shimotake Law Firm, LLC file Chapter 13s for clients but more importantly, evaluate each case and determine the best options for all their clients.  Call or text us at (312) 620-6499 to schedule your FREE EVALUATION.