On average, more than 30,000 individuals file for bankruptcy in Texas every year. Unmanageable debts, huge medical expenses, job loss, business failure, divorce, etc., are some of the most common reasons that can lead an individual to a financial situation where it becomes infeasible to manage their living expenses. In such a situation, filing for bankruptcy is the only way for them to cope with their financial situation.
However, it is pertinent to mention here that you should seek help from professionals, like the Law Office of Corey L. Mills while filing for bankruptcy to enhance your chances of qualifying.
Advantages of filing Chapter 13 bankruptcy
Chapter 13 is a part of federal bankruptcy law that enables individuals who are unable to pay their debts to start over. Chapter 13 protects debtors from the tactics creditors employ to collect the balance debt, like lawsuits, wage garnishment, and collateral seizing.
Here are some advantages of filing for Chapter 13 bankruptcy.
- You get more time to pay off your debt, which reduces the amount of your monthly payments.
- You can still keep the asset or property while making the debt payment.
- You can save yourself from missed debt payments, repossession, default, and lawsuits.
- You can qualify for a new line of credit within up to three years of filing for bankruptcy. However, the interest rate may be substantially higher.
- While you can file for Chapter 7 bankruptcy every six years, you can repeatedly file for Chapter 13 bankruptcy. However, it will appear on your credit record.
Downsides of Chapter 13 bankruptcy
Despite its positive aspects, filing for bankruptcy has several downsides. Here are some of the most prominent disadvantages of filing for Chapter 13 bankruptcy.
- Despite all the benefits of Chapter 13 bankruptcy, it can take about five years to pay your debts.
- You will still pay off the debts using your disposable income, which is the amount you have in hand after paying for necessities like food, medical care, shelter, etc.
- A Chapter 13 bankruptcy can appear on your credit report for around ten years.
- You may not be able to use your credit cards anymore.
- You won’t be able to file for Chapter 7 bankruptcy if you went through a Chapter 13 bankruptcy proceeding within the last six years.
- It won’t get rid of your student loan.
Who can file for Chapter 13 bankruptcy?
You can file for Chapter 13 bankruptcy if you meet the following conditions.
- You are not a limited liability company or corporation.
- A prior bankruptcy does not bar you.
- Your previous bankruptcy case was not dismissed within the last 180 days.
- You fulfill all the requirements of credit counseling.
- You have sufficient income to pay the debt.
- You filed your income tax return.
- Your debts are not abnormally high.
