Dedicated Chapter 13 Bankruptcy Attorney Serving Texarkana Families Facing Insolvency

The Chapter 13 Basics

person experiencing liberation from debt after successfully filing chapter 13 bankruptcyWhen you file for chapter 13 bankruptcy (also known as the wage-earner’s bankruptcy), you will be eligible to keep your property while you pay back all or a significant chunk of your debts over a three to five year period. This differs from chapter 7 bankruptcy, in which most of your debts are cancelled but at the cost of forfeiting some property to the bankruptcy trustee in order to pay your creditors.

The Pros & Cons of Chapter 13

Most people considering chapter 13 bankruptcy are deliberating between it and chapter 7. While we won’t get into the deep specifics, below is a simplified list of the fundamental advantages and disadvantages of filing for chapter 13 bankruptcy.

Pros

  • Retaining ownership of most or all of your property, including secured property.
  • The bankruptcy only stays on your credit report for seven years, as opposed to ten years after a chapter 7 filing.
  • You may be able to discharge more debts through chapter 13 than 7.

Cons

  • The entire process takes three to five years, as opposed to the four to six month chapter 7 process.
  • The long process means you won’t be able to rebuild your credit or take out any loans for several years.
  • Your financial “fresh start” will be delayed longer than if you filed for chapter 7.

Chapter 13 Eligibility

If your source(s) of income is inconsistent or too low, a court may not allow you to file for chapter 13 bankruptcy. If your total debt burden is too high, you will also be ineligible. Your secured debts cannot exceed $1,149,525 and your unsecured debts cannot exceed $383,175. To be clear, “secured debts” are those in which your creditors maintain the right to claim a specific item of property (i.e. your house or car) in the event that you don’t repay the debt. Alternatively, “unsecured debts” (i.e. a credit card or medical bill) do not give your creditors this right.

The Chapter 13 Process

Before you are eligible to file for chapter 13 bankruptcy, you will be required to obtain credit counseling from an agency approved by the United States Trustee’s office. Then, you will submit your petition for bankruptcy along with documentation stating you completed your credit counseling. Next you’ll meet with a judge who will assess your petition and either approve or deny it. If approved, a very strict payment plan and schedule will be determined for you. If you make all of your payments in full and on time, much of your debt will be discharged in the end.

You Don’t Have to Face Bankruptcy Alone

The most important thing to keep in mind as you consider your options is that you don’t have to make these decisions alone. The caring and trusted attorneys at Graham Law Firm have helped countless families face their financial problems head-on and move past them. Though you may be feeling apprehensive and overwhelmed, the best approach is to get the help you need and get to work. That’s where we come in. To learn more and ask questions, call us today to schedule a completely free consultation.

Graham Law Firm has been representing the good people of Texarkana, Magnolia, Camden and El Dorado for nearly 20 years. If you are currently considering filing for chapter 13 bankruptcy, contact David today at our Texas office, (903) 223-9797, or our Arkansas office, (870) 234-9100, to schedule your free consultation.

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