If a Chapter 7 won't meet your financial needs, a Chapter 13 likely will. In a Chapter 13, your income and assets stand good for your debts. A Chapter 13 discharge requires you to make payments for three to five years. But compared to Chapter 7, Chapter 13 has several advantages.
Because of the limitations listed above, not everyone can find relief in any chapter of bankruptcy. Talk to an experienced bankruptcy attorney to see if bankruptcy is the best option for your situation.
The chief practical difference between a Chapter 7 filing and a Chapter 13 is that the Chapter 13 petition is filed with a plan of repayment. The plan will be created between you and your attorney and, like everything in bankruptcy, strikes a balance between your rights and your creditors'. I always say there's a dynamic tension between a good faith effort to repay (your creditor wants top dollar) and your actual ability to repay (you want to make the smallest payment possible).
Because of that tension, the budget in a Chapter 13 is the most important part of the filing. Since creating a real life budget is as much Art as Science, an experienced bankruptcy attorney can make a world of difference in your plan payment--the difference between some belt tightening and 3-5 years of struggle. Besides having a good sense of what allowances for items like food and entertainment are considered reasonable, we can ask enough questions to jog your memory about expenses that may not happen monthly, but need to be considered.
While Bankruptcy Courts tend to expect budgets that show some "belt tightening"--described in the Eastern District of Kentucky as "not living the lifestyle that got them into debt in the first place", if you have managed to keep your minimum balances paid, but know you're treading water, a Chapter 13 payment can often be a fraction of those minimum payments and leave you debt free in sixty months.
While a Chapter 13 should never be the first choice for a bankruptcy filer (contrary to popular belief, it will not restore your credit faster than a Chapter 7), a well crafted Chapter 13 plan can make overwhelming debt manageable for a lot of people. Reach out to a bankruptcy attorney to see if Chapter 13 or another option can help you find Life After Debt.
Unlike ordinary debt consolidation, you don't have to negotiate with Creditors one by one. In most circumstances Chapter 13 can get you a Discharge after paying a fraction of your unsecured debts, e.g. credit cards and medical bills.
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