Filing bankruptcy can be a big financial decision to make. Make sure you know the facts about Chapter 13 bankruptcy before you file.
Myth: All debts you have must be included in the repayment plan.
All debts do not have to be included in a Chapter 13 bankruptcy repayment plan; you can actually choose to file only on what you want. Therefore, if you have certain accounts that are in good standing that you would prefer to keep as they are, you can do so. For instance, if you own a vehicle you are making payments on and that account is in good standing, you do not have to file bankruptcy on that account. As an adage, some debts may not be included in a repayment plan and can be discharged.
Myth: Your credit takes a worse blow with Chapter 13 bankruptcy than with Chapter 7.
Bankruptcy essentially resets your credit. Some lenders prefer not to work with someone who has filed bankruptcy for a predetermined span of time after the actual filing. However, bankruptcy doesn't necessarily mean you will never have good credit again. In fact, Chapter 13 bankruptcy can look better on your credit because you will still be paying back what has been borrowed with alternate terms.
Myth: It is really hard to afford the payments with Chapter 13 bankruptcy.
The purpose of filing Chapter 13 is to make sure you are in a good financial spot to pay back debts accumulated that you have not been able to keep current. With that being stated, it is easy to understand why this myth cannot apply. Your bankruptcy attorney will help you examine your finances and determine how much income you can logically allocate toward debt paydown. You will not be expected to pay more than your income or so much that it would be impossible for you to keep up with your payments.
Myth: You will lose your property with Chapter 13 bankruptcy.
Chapter 13 bankruptcy is less likely to involve forfeiture of property than other types of bankruptcy. If you are filing Chapter 13, you will be making payments toward properties involved as collateral with your debts. Therefore, most debtors will not expect you to forfeit your property. Likewise, your ability to file for Chapter 13 bankruptcy does not weigh so heavily on how much property or tangible assets you have. With Chapter 7 bankruptcy, there can be tangible asset limitations involved.
To learn more about Chapter 13 bankruptcy, reach out to a bankruptcy lawyer in your area.