Filing for bankruptcy is a big decision for any borrower. Along with the ethical and emotional implications of having to take this extreme step, most people struggle with the idea of losing their assets. However, Chapter 13, or repayment, bankruptcy can make this decision much easier on you. Why? Here are five aspects of Chapter 13 that address many of the biggest worries about bankruptcy.
1. You Keep Your Assets
Because most people envision bankruptcy as the liquidation of their assets, they hesitate to file for protection until there are no other choices left. However, liquidation isn't the only route. Chapter 13 bankruptcy allows you to keep most of your assets and instead create a three to five year repayment plan.
2. You Pay Your Debts
Do you have moral or ethical doubts about simply not paying back what you borrowed? This is laudable, but it doesn't have to stop you from seeking bankruptcy relief. Chapter 13 is particularly helpful for those who feel as you do because you end up repaying most or all of those debts. You simply get help in making it manageable.
3. You Control Many Decisions
All bankruptcy claimants make important decisions about what assets to protect and which chapter to file. But you retain even more control when using Chapter 13. You aren't handing matters over to a trustee and waiting for them to decide everything. Instead, you come up with your own workable payment plan. While the court must approve it, this gives you control over your own money — possibly in ways you haven't had during debt struggles.
4. Your Credit Impact Is Less
Chapter 13 bankruptcy can have a lower impact on your credit score. Why? While the bankruptcy is still noted on your report, the repayment plan prevents some other adverse actions. If you reaffirm your home or auto loan, for instance, you prevent foreclosure or repossession. Without these additional negative items on your report, the score will drop less.
5. You Commit to Changes
Finally, Chapter 13 is not a one-time event that clears the decks and lets you continue on doing what you've always done. Instead, it causes borrowers to budget and requires they make consistent payments for three to five years. It's a long-term commitment that can have positive long-term effects on your finances.
Where to Start
Could Chapter 13 bankruptcy provide the compromise that you need in order to feel better about claiming this protection? If so, start by learning more about how it works. Meet with a bankruptcy attorney in your state today. Visit a firm like the Law Offices of Dan Moulton for more information.
After being involved in a serious auto accident with a drunk driver, I struggled heavily with getting the driver's insurance company to open a claim. When the insurance company started pushing back, I knew I needed to do something. I spent a lot of time digging through the laws surrounding auto accident claims so that I knew what my legal rights were. I even talked with an auto accident attorney. I created this site to teach others about what I learned, including my court experience. I hope it helps you to determine how you should proceed with your auto accident case.