Benefits and Drawbacks of Chapter 13

Bankruptcy Attorney

Filing for Chapter 13 Dayton bankruptcy can have tremendous benefits for your finances. Depending on your situation, a repayment plan under Chapter 13 can be a real boon, enabling you to get caught up on all your arrearages while ensuring you are able to make all required payments going forward, and discharging your remaining unsecured debt at the end of the period. Chapter 13 bankruptcy is not without its drawbacks, though. Here is a brief overview of some of those main benefits and drawbacks.

Benefits

One of the most important benefits of a Chapter 13 filing is that it enables you, the debtor, to get current on your payments for your secured debts, such as your mortgage or auto payments. This is an invaluable benefit for those whose auto or mortgage payments have fallen desperately into arrears, and who may otherwise be facing the loss of their home through foreclosure or their car through repossession. Chapter 13 prevents creditors from taking any action during the entire three to five year course of the repayment plan, giving you plenty of time to get caught up on back payments and to keep your property.

In addition, this chapter of bankruptcy provides extra time to repay other non-dischargeable debts, such as tax debts or student loan debts. Often it can mean the difference between financial ruin and coming out of bankruptcy financially stable.

Drawbacks

The main drawbacks of Chapter 13 are related to the length of the repayment plan. There is a lot that can go wrong over the course of a three to five year period, and too often debtors find themselves unable to make the agreed-upon payments under their bankruptcy due to changed financial circumstances or for other reasons. The bankruptcy code provides ways to renegotiate the repayment amount if further financial hardship should occur, but still it can be very difficult to keep a repayment schedule for the entire term of the plan.

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