The Pros and Cons of Filing for Chapter 13 Bankruptcy
Filing for bankruptcy can give you substantial debt relief, helping you to regain control of your finances and get your life back on track. When many people think of filing for bankruptcy in Glendale, they think of Chapter 7, which discharges all of your unsecured debt if you qualify. Chapter 13 bankruptcy is what’s known as a “debt reorganization plan.” With it, your debts are consolidated into a single repayment plan that lasts three to five years. You may pay lower interest and a lower monthly payment, and at the end of the repayment period, your remaining debt may be discharged.
There are some advantages to filing Chapter 13 bankruptcy in Phoenix, but there are a few drawbacks, as well. You need to discuss your personal circumstances with an experienced Phoenix bankruptcy lawyer so that you can understand how bankruptcy will impact you specifically. Here are a few pros and cons of filing for Chapter 13 bankruptcy that you will need to consider:
End to Creditor Harassment
Right after you file for bankruptcy, an automatic stay is issued that prevents creditors from continuing their efforts to collect on your debts. Creditors should not call you at your home or work, and they should not send you email or direct mail. If they do, they can be subject to legal action.
Just filing for bankruptcy can put an end to the harassment that you have likely dealt with for months. You’ll immediately be able to breathe a sigh of relief.
If you are falling behind on your mortgage, you may be at risk of foreclosure. Filing for Chapter 13 bankruptcy in Mesa can help you become current on your payments so that you can avoid foreclosure and save your family home.
If you have already entered foreclosure, filing for bankruptcy may not help. You need to consult with your bankruptcy attorney serving Gilbert to find out what your options are.
Pay Off Debts
Of course, filing for Phoenix Chapter 13 bankruptcy allows you to pay off both your secured and unsecured debts. The process puts you on a repayment plan to help you pay what you can according to your income and assets.
The plan will often involve a lower monthly payment, and will result in you paying much less overall. So, your debt becomes much more manageable, and you even save some money in the process.
Defined Repayment Plan
When you are struggling to pay off debt on your own, you really don’t know when it’s going to end. You may have goals in mind, and you may even have an end date based on how much you are paying each month, but that can change with fluctuating interest rates or financial setbacks.
Filing for Chapter 13 bankruptcy in Mesa puts you on a defined payment plan. You know exactly when your debt problems are going to be over, and that can make it easier for you to put your head done and get through it.
Hit to Your Credit
There’s no way around it: Filing for bankruptcy in Glendale will be a hit to your credit. But it’s important to keep this in perspective. If you were to continue struggling under the weight of debt, you would destroy your credit. Your balances would become too high, and you would rack up late payments and delinquencies.
Filing for bankruptcy stops all that in its tracks and gives you one black mark on your credit report. If you continue to make timely payments and smart financial choices, you can quickly build your credit back up.
Inability to Discharge Debts
Unlike with Chapter 7 bankruptcy, you don’t discharge all your debt in Chapter 13. You are actually paying it back. Certainly, that’s not as great as just freeing yourself of the debt and moving on. However, Chapter 13 may be your only option if you don’t meet the criteria for Chapter 7 or if most of your debts cannot be included with Chapter 7.
Filing for Chapter 13 bankruptcy in Mesa has a number of pros and cons, but when you assess them all, you can see that there are more advantages. Filing for Chapter 13 bankruptcy can help you get control of your debts and finally be free of them.
Call My AZ Lawyers today to talk to an Avondale bankruptcy attorney about your options for debt relief. You may find that Chapter 13 bankruptcy will give you the best options, or you may find that you would get more from Chapter 7 bankruptcy. Your attorney will help you understand the options and how each would best impact your financial circumstances. We serve clients in Glendale, Tucson, Mesa, and Phoenix. Call our bankruptcy law office today to schedule your consultation.
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