{"id":2667,"date":"2021-02-22T06:59:32","date_gmt":"2021-02-22T11:59:32","guid":{"rendered":"https:\/\/thegraftonfirm.com\/?p=2113"},"modified":"2022-02-14T05:07:03","modified_gmt":"2022-02-14T10:07:03","slug":"is-a-chapter-13-bankruptcy-worth-it","status":"publish","type":"post","link":"https:\/\/thegraftonfirm.com\/ch13\/is-a-chapter-13-bankruptcy-worth-it","title":{"rendered":"Is a Chapter 13 Bankruptcy Worth It?"},"content":{"rendered":"<p>Bankruptcy protection is one of the rights Americans have when they\u2019re put in financial hardship. Declaring bankruptcy can give you debt relief with credit card debt, student loan debt, medical bills, and other types of debt. It can also grant you respite from wage garnishment and harassment from a collector.<\/p>\n<p>In this article, we\u2019ll discuss what you need to know to determine whether filing for bankruptcy under Chapter 13 is worth your time and effort. Read on to find out about how Chapter 13 works and its pros and cons. Of course, these are all generalizations and specifics vary from case to case. It\u2019s still best to consult with a bankruptcy attorney.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Chapter_13_Overview\"><\/span>Chapter 13 Overview<span class=\"ez-toc-section-end\"><\/span><\/h2><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-662f12357d5cc\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-662f12357d5cc\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/thegraftonfirm.com\/ch13\/is-a-chapter-13-bankruptcy-worth-it\/#Chapter_13_Overview\" title=\"Chapter 13 Overview\">Chapter 13 Overview<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/thegraftonfirm.com\/ch13\/is-a-chapter-13-bankruptcy-worth-it\/#Who_is_eligible_for_Chapter_13_bankruptcy\" title=\"Who is eligible for Chapter 13 bankruptcy?\">Who is eligible for Chapter 13 bankruptcy?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/thegraftonfirm.com\/ch13\/is-a-chapter-13-bankruptcy-worth-it\/#Repaying_debts_in_Chapter_13_bankruptcy\" title=\"Repaying debts in Chapter 13 bankruptcy\">Repaying debts in Chapter 13 bankruptcy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/thegraftonfirm.com\/ch13\/is-a-chapter-13-bankruptcy-worth-it\/#The_Pros\" title=\"The Pros\">The Pros<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/thegraftonfirm.com\/ch13\/is-a-chapter-13-bankruptcy-worth-it\/#Keep_the_house\" title=\"Keep the house\">Keep the house<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/thegraftonfirm.com\/ch13\/is-a-chapter-13-bankruptcy-worth-it\/#Co-signers_may_be_protected\" title=\"Co-signers may be protected\">Co-signers may be protected<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/thegraftonfirm.com\/ch13\/is-a-chapter-13-bankruptcy-worth-it\/#Help_with_domestic_support_payments\" title=\"Help with domestic support payments\">Help with domestic support payments<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/thegraftonfirm.com\/ch13\/is-a-chapter-13-bankruptcy-worth-it\/#Consolidate_payments\" title=\"Consolidate payments\">Consolidate payments<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/thegraftonfirm.com\/ch13\/is-a-chapter-13-bankruptcy-worth-it\/#The_Cons\" title=\"The Cons\">The Cons<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/thegraftonfirm.com\/ch13\/is-a-chapter-13-bankruptcy-worth-it\/#Negative_Credit_Impact\" title=\"Negative Credit Impact\">Negative Credit Impact<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/thegraftonfirm.com\/ch13\/is-a-chapter-13-bankruptcy-worth-it\/#Additional_Risks\" title=\"Additional Risks\">Additional Risks<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n\n<p>Chapter 13 bankruptcy is also known as a reorganization bankruptcy. People typically file for this if they don\u2019t qualify for Chapter 7 or they want to keep certain assets, like their home or their car, and just stop foreclosure or repossession.<\/p>\n<p>If you have a steady income and want to keep your property, then Chapter 13 is the right one for you. Consult with an expert in bankruptcy law for more information.<\/p>\n<p>When you declare bankruptcy under Chapter 13, the court administers a debt repayment plan, unlike in <b><a href=\"https:\/\/thegraftonfirm.com\/debt-resolution-services\/chapter-7\">Chapter 7<\/a><\/b> where your assets are liquidated to pay off your debt. Any remaining debt after you pay off your plan will be wiped out and discharged, giving you a fresh start at being financially secure.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Who_is_eligible_for_Chapter_13_bankruptcy\"><\/span>Who is eligible for Chapter 13 bankruptcy?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Unlike Chapter 7, there is no means test to qualify for this Chapter. Anyone with regular income can file for <b><a href=\"https:\/\/thegraftonfirm.com\/debt-resolution-services\/chapter-13\">Chapter 13 bankruptcy<\/a><\/b>, as long as the total debt is within the threshold. The individual\u2019s monthly income level helps determine the timeline of the repayment plan. If your income exceeds the state median level income, you\u2019ll be paying for your bankruptcy for five years. Otherwise, it\u2019s for three years.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Repaying_debts_in_Chapter_13_bankruptcy\"><\/span>Repaying debts in Chapter 13 bankruptcy<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Debtors first propose their repayment plan and get court approval for it. This plan should describe:<\/p>\n<ul>\n<li>Who your trustee is<\/li>\n<li>How much you\u2019ll pay them each month<\/li>\n<li>How they\u2019ll receive payment<\/li>\n<li>How long the plan is<\/li>\n<\/ul>\n<p>The approval usually takes 95 days from the day of filing. Upon filing, a court order called an \u201cautomatic stay\u201d prevents further efforts from debt collectors to collect unpaid debt. The debts won\u2019t be discharged until after the plan is paid in full.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_Pros\"><\/span>The Pros<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>There are some advantages to filing for Chapter 13 instead of Chapter 7 \u2014 and advantages to filing for Chapter 13 versus not filing bankruptcy at all.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Keep_the_house\"><\/span>Keep the house<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>If you\u2019re behind on paying for a mortgage, the repayment plan can help you catch up and save your home from being foreclosed.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Co-signers_may_be_protected\"><\/span>Co-signers may be protected<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>When you file for Chapter 13, creditors cannot collect payment from any of your co-debtors, which means that those who agreed to help you by co-signing would not have to face harassment from collection agencies.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Help_with_domestic_support_payments\"><\/span>Help with domestic support payments<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>You can add domestic support obligations, alimony, and child support to your Chapter 13 plan. Once you reorganize your payments, you can avoid jail time and other court cases.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Consolidate_payments\"><\/span>Consolidate payments<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Instead of having to pay separate creditors, you just pay your trustee and they\u2019ll be the one who\u2019s responsible to send payments to the lenders.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_Cons\"><\/span>The Cons<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Although Chapter 13 can help when you\u2019re in a financial pinch, it does have its disadvantages.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Negative_Credit_Impact\"><\/span>Negative Credit Impact<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Your credit score will take a hit after a bankruptcy case. However, it\u2019s much better compared to when your report is covered with your debt. A Chapter 13 Bankruptcy will be on your reports for seven years starting from the bankruptcy filing.<\/p>\n<p>The hit on your credit report affects multiple facets of your life. It can affect your ability to get a job, your application for rent, or the rates and fees for loans.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Additional_Risks\"><\/span>Additional Risks<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>You must take care to follow the repayment schedule. If you miss or delay any scheduled payment, you might lose the assets you were supposed to protect. All your disposable income would be dedicated to your repayment plan and an increase in your wages could also spell an increase in your monthly payments<\/p>\n<p>Unless you are an expert on the rules of the bankruptcy court in Maryland, the US Bankruptcy Code, and federal procedures, you should expect to need an attorney to file your case. If you file on your own, know that judges and other court employees are prohibited from providing you with legal advice.<\/p>\n<p>Don\u2019t let the potential cost of filing bankruptcy scare you away from the option. If you need help with how to file for bankruptcy, a <b><a href=\"https:\/\/thegraftonfirm.com\/\">bankruptcy lawyer<\/a><\/b> from <b>Grafton Firm, LLC<\/b> can assist. <b><a href=\"https:\/\/thegraftonfirm.com\/contact-us\">Contact us <\/a><\/b>here or call (410) 505-0414 today for a free consultation.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bankruptcy protection is one of the rights Americans have when they\u2019re put in financial hardship. Declaring bankruptcy can give you debt relief with credit card debt, student loan debt, medical bills, and other types of debt. It can also grant you respite from wage garnishment and harassment from a collector. In this article, we\u2019ll discuss [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2115,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[58],"tags":[],"_links":{"self":[{"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/posts\/2667"}],"collection":[{"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/comments?post=2667"}],"version-history":[{"count":2,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/posts\/2667\/revisions"}],"predecessor-version":[{"id":3312,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/posts\/2667\/revisions\/3312"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/media\/2115"}],"wp:attachment":[{"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/media?parent=2667"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/categories?post=2667"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/tags?post=2667"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}