Four Advantages Of Filing For Chapter 13 Bankruptcy

Even in the best of economies, it isn't always easy for families to make enough money to pay for everything they need. Two-income families are pretty much a necessity, but that still isn't a guarantee they will be financially stable. The unexpected can happen, and many American families are only a paycheck away from financial disaster. Layoffs, medical emergencies, and other unexpected events can turn a situation upside-down in no time.

One way to protect yourself and your assets should you find yourself in a financial predicament is by filing for a Chapter 13 bankruptcy. A visit with a professional bankruptcy attorney will give you more information about your important legal rights and protections under the bankruptcy system, but here are some of the main advantages.

A Chapter 13 Filing Allows You To Pay Only What You Can Afford

When you are unable to meet your monthly living expenses for your basic necessities as well as meet your other financial obligations, a Chapter 13 may be just what you need. With the help of the bankruptcy attorney, you gather and list all your creditors and what you owe to each. You then compile all your assets and income. The Bankruptcy Court will determine by a set formula what they feel you are realistically able to pay towards your creditor obligations each month.

A Chapter 13 Filing Allows You To Make One Payment Monthly

Once the court determines what you can afford, rather than paying your creditors directly, you make the one payment monthly to a bankruptcy trustee appointed by the Bankruptcy Court. They then disperse your payment to the creditors in the pre-determined allotment.

A Chapter 13 Filing May Improve Your Credit

Because you cannot take on any new debt without the permission of the bankruptcy trustee, coupled with the fact you are making the legally expected payment, your credit score may be better by the time your 3-5-year bankruptcy repayment plan is complete. Creditors are also not required to report during this time, however they must report once the plan is complete and mark the debt as satisfied in most cases. Between not taking out new credit and accounts being marked paid, your credit unions scores will likely improve.

A Chapter 13 Filing Can Save Your Home

If you are in danger of having your home foreclosed upon, filing Chapter 13 is the best thing you can do. As long as you can make the next regular payment every month after filing, you will have the 3-5 years to take care of the arrearages.

Contact a firm, like McElrath Law, for more help.