If the debt you have accumulated feels insurmountable, it very well may be. Depending on your financial situation, you might be eligible to declare Chapter 7 or Chapter 13 bankruptcy. Those who qualify for both kinds of personal bankruptcy should consider the pros and cons of each to determine the best approach for their family. Below, the legal team at Arnold Law Offices provides an in-depth look at Chapter 13 to help you get started.

Understanding Chapter 13 Bankruptcy

What Are the Advantages?

Unlike Chapter 7 bankruptcy, which requires the liquidation of nonexempt assets to pay back creditors, Chapter 13 bankruptcy allows debtors to retain their property. This is one of the main reasons why people opt for declaring Chapter 13 over Chapter 7.

Chapter 13 also allows debtors to enter a more reasonable payment plan than the arrangement they currently have with various lenders. This plan will not extend beyond five years, regardless of how much debt they have accumulated, and any debt that remains will be discharged just as it would be by filing Chapter 7. Additionally, a Chapter 13 filing will only remain on a credit report for up to seven years, whereas a Chapter 7 filing can remain for up to 10.

What Are the Drawbacks?

Chapter 13 bankruptcy is known as “reorganization” bankruptcy because it requires debtors to pay back some or all of their debt over a three to five-year period. Many people consider this a drawback, especially when comparing it to Chapter 7, which discharges debt immediately.

The proceedings for filing Chapter 13 also tend to be more complicated—and costly—than those for declaring Chapter 7 because they typically take longer. Devising a reasonable payment plan that works for your current financial situation and is deemed acceptable by the court takes time, but a strategic lawyer can help streamline the process.

If you want to discharge debt but are unsure if Chapter 7 or Chapter 13 bankruptcy is the best approach, turn to Arnold Law Offices. Located in Pell City, AL, they have focused their practice areas to ensure they always provide the best and counsel possible. You can learn more about declaring bankruptcy by visiting their website. To schedule an initial consultation with a seasoned attorney who can help you regain your financial footing, call (205) 338-6565.