Even with diligent financial planning, it’s not hard to get behind on your debts. Unexpected financial hardships, job insecurities, and a market that’s constantly in flux make it difficult to predict with 100% accuracy how your budget will look on a monthly basis. If you’ve fallen behind on payments, one solution is to file for Chapter 13 bankruptcy in Flint, MI. This is a helpful way to create a repayment plan that works for both you and your creditors, but before filing, it’s crucial to fully understand the benefits and drawbacks of this option.
Benefits of filing Chapter 13 bankruptcy in Flint, MI.
It extends the amount of time you have to repay your debts.
When you file for Chapter 13 bankruptcy, you’ll create a repayment plan in conjunction with your creditors that extends three to five years. That way, you can repay your debts more comfortably without having your credit score being hit with detrimental missed and late payments. This makes it a helpful tool to start rebuilding your finances and boosting your credit score for the future.
You can often reduce the total amount you have to pay.
Chapter 13 bankruptcy in Flint, MI, establishes a plan that enables individuals with regular income to develop a plan to repay all or part of their debt. If your filing is successful, you’ll make installment payments to creditors over the three to five-year agreement, and whatever unsecured debts that are not paid at the end of that period are legally eliminated. This includes things like credit cards, medical bills, and most personal loans.
Chapter 13 bankruptcy allows you to keep your property.
One of the stipulations of Chapter 13 bankruptcy is that you don’t have to forfeit the property that you’re making payments on during the agreed-upon schedule. That is why many people who are facing foreclosure or losing their car choose to go this route. Rather than losing their home or vehicle, they can create a feasible repayment schedule to pay back their creditors.
Drawbacks of filing for Chapter 13 bankruptcy.
You don’t get to discharge your debts.
This is one of the most significant differences between Chapters 7 and 13 bankruptcy. With Chapter 7, you’re actually freed up of the debts you owe, but with Chapter 13, you’re creating a repayment plan that you can meet. So while you can pay off the debts that you owe, you aren’t wholly forgiven from the burden.
The payments come out of your disposable income.
When you’re creating the repayment plan, you’ll have to provide a complete account of how much income you make each month and what your total cost of living is currently. The authorities will ensure you have enough money to cover necessities like rent and food, but anything left over can be used to make your payments. That means for the next three to five years, you won’t have the financial luxury of being able to splurge on personal purchases.
It will impact your credit history.
Filing for Chapter 13 bankruptcy helps manage your overall debt so you can avoid the adverse effects of late and missed payments on your credit score, but it doesn’t mean you won’t take a hit. Chapter 13 stays on your credit report for up to 10 years. This makes it more difficult to obtain personal loans, a mortgage, and credit cards with favorable interest rates.
Are you considering filing for Chapter 13 bankruptcy in Flint, MI?
Before you make your decision, it’s always best to seek professional advice, and Bankruptcy Attorney James L. Gutting can provide the insights you need. The implications of filing for bankruptcy are long-lasting, so it’s a decision that should never be taken lightly. Our team has the expertise you need to help ensure this is the best option for your unique situation and will assist in the filing process if you decide to move forward. You can learn more about the bankruptcy process or just send us a message to set up your initial consultation.