Are you one of the many Pennsylvania residents struggling to meet debt obligations? Do you have money coming in but not enough to get you out of the financial hole you have found yourself in? If you are, Chapter 13 bankruptcy may be the answer you are looking for.
What is Chapter 13 bankruptcy? How do you know if it is the right fit for you? Are there any downsides to filing for bankruptcy?
Chapter 13 basics
Chapter 13 bankruptcy is also known as a reorganization bankruptcy. It is for people who have money coming in but need help meeting their debt obligations. If this type of bankruptcy filing receives court approval, the filer will create an affordable repayment schedule that fits within his or her current budget. However, the court must approve the schedule.
Repayment plans last anywhere from three to five years. You will make payments to a trustee, and the trustee then passes the money on to creditors. After the scheduled period is over, remaining debts may qualify for discharge.
Is it the right fit?
There are a number of debt relief options out there. Some people do not actually need bankruptcy. To learn if it is the right fit for you, you need to weigh all of your available options. Legal counsel can go over this information and help you decide which debt relief option will best benefit you now and in the long run.
Downsides to bankruptcy
While there are a lot of benefits to pursuing a Chapter 13 bankruptcy filing when you really need it, there are some downsides that certainly deserve your consideration. A few of them being:
- It will affect your credit score.
- You do have to pay back creditors.
- Obtaining credit after approval can prove difficult.
For some, these disadvantages may be a big deal, and for others, they may not. Everyone has to consider his or her own needs and goals when looking at debt relief options and choose a course of action that works best.
Chapter 13 bankruptcy is not perfect and it is not for everyone. The only way to know if it will work for you is to learn more about it and seek counsel on the matter. If it is determined to be the best option, you can seek help with your filing and seeking court approval.