When Texas residents fall into debt, bankruptcy is a good tool to pull yourself back out. The two types of bankruptcy most often discussed are Chapter 7 and Chapter 13. Chapter 13 is our focus today. What are the benefits? What are the drawbacks? Join us as we lay them out.
Chapter 13 bankruptcy is also called wage earner’s bankruptcy. It only works if you have the ability to pay off your debts through a restructured payment plan. Before anything else, you should see if you are eligible for this plan. If you do not make enough money, it may not be an option for you.
If it is an option, you have plenty of benefits to look forward to. For example, Chapter 13 trustees often offer flexibility that you cannot find elsewhere. They allow you to stretch out debt payments or reduce payments. In some instances, you can even give up the item you are making payments on. They work with you to ensure you have everything needed to pay them back.
The biggest downside is that you pay your debts with your disposable income. Needless to say, this means you will be living on a tighter budget. This could last for years, which is a big con for many. You will also lose your credit cards. Not only that, but certain debts are not covered by Chapter 13, such as student loans. This is why careful consideration is necessary before you make your decision.
Are you curious about Chapter 13 bankruptcy? Do you want to read more about it? Are you interested in other debt-relief options or types of bankruptcy? If so, you can click the link here. It will take you to our web page on Chapter 13 bankruptcy. There, you can satisfy your questions and then some.