Advantages & Disadvantages
Bankruptcy Attorneys: Belleville, IL | Glen Carbon, IL | Highland, IL

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Chapter 13 Advantages & Disadvantages

Chapter 13 Bankruptcy provides for a restructuring and repayment of your debt. In most cases, debt is also reduced in order to make the repayment plan affordable over the repayment period, usually 3 - 5 years. There are specific qualifications for Chapter 13 Bankruptcy that must be met. Chapter 13 Bankruptcy has many advantages over Chapter 7 Bankruptcy that some people find attractive. In fact, some people who qualify for Chapter 7 Bankruptcy chose to file under Chapter 13 Bankruptcy.

There are specific advantages and some disadvantages to both Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.

Advantages of Chapter 13 Bankruptcy

  • You can choose to keep your property, provided you can afford the payment plan.
  • Debt is restructured into an affordable payment plan, many times either reducing or eliminating payment on the debt.
  • More types of debt can be discharged.
  • You can file a Chapter 13 Bankruptcy at any time, and in most cases, filing a second time is allowed, if necessary.
  • Co-signers are protected from creditors if the repayment plan provides for full repayment.
  • Creditors can be categorized, resulting in different percentages of repayment by category.
  • More time to repay your debt not discharged by Chapter 13 Bankruptcy such as child support, taxes, student loans, etc.


Disadvantages of Chapter 13 Bankruptcy

  • The repayment plan is created using your post bankruptcy income, which ties up your income until the bankruptcy is discharged.
  • The repayment plan can last 3 - 5 years.
  • Legal fees are higher as a Chapter 13 Bankruptcy is more complex.
  • Stockbrokers and commodity brokers cannot file this type of bankruptcy.

As you can see, there are some clear advantages and disadvantages to Chapter 13 Bankruptcy. Additionally, there are complex areas of law, such as exemptions, most people find confusing. An experienced bankruptcy lawyer can explain how the law applies to your specific situation so you can make an informed decision.

We offer a FREE Consultation with a bankruptcy lawyer so you can make an informed decision about what type of bankruptcy is right for you.