How Do I Know If Chapter 13 Bankruptcy Is the Right Choice?

Facing overwhelming debt can be stressful, and deciding how to handle it is a critical step toward financial stability. For many individuals, Chapter 13 bankruptcy offers a structured way to manage debt while keeping important assets like a home or car. But how do you know if Chapter 13 bankruptcy is the right choice for you?

At Lazarus Law, we help clients through the bankruptcy process to find the best solution for their unique financial situations. If you’re considering Chapter 13 bankruptcy, here’s what you need to know before making your decision.

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is often called a "wage earner’s plan" because it helps people with a steady income reorganize their debts and pay them off over time. Unlike Chapter 7 bankruptcy, which eliminates most debts quickly, Chapter 13 bankruptcy involves creating a repayment plan that typically lasts three to five years.

During this time, you make monthly payments to a court-appointed trustee, who then distributes funds to your creditors. In many cases, Chapter 13 bankruptcy allows individuals to keep their home and car while catching up on missed payments.

Signs That Chapter 13 Bankruptcy Might Be Right for You

While Chapter 13 bankruptcy is not the right option for everyone, it can be beneficial under the following circumstances:

You Have a Steady Income

To be eligible for Chapter 13 bankruptcy, you must demonstrate a consistent and dependable income source. This ensures you can make consistent monthly payments according to your court-approved repayment plan. If you are unemployed or do not have a stable income, Chapter 7 bankruptcy may be a better option.

You Are Behind on Mortgage or Car Payments

If you’re struggling to keep up with mortgage or car payments and facing foreclosure or repossession, Chapter 13 bankruptcy can help. It lets you catch up on missed payments over time while keeping your home or car.

You Have Debts That Cannot Be Discharged in Chapter 7

Certain debts, such as tax obligations, student loans, and child support, are not discharged under Chapter 7 bankruptcy. However, Chapter 13 bankruptcy allows you to restructure these debts into a manageable payment plan, giving you more time to pay them off.

You Want to Protect Your Assets

Unlike Chapter 7 bankruptcy, which may require you to sell non-exempt assets to pay off creditors, Chapter 13 bankruptcy allows you to keep your property. If you have valuable assets you want to protect, this type of bankruptcy may be the right choice.

You Have Co-Signers on Loans

If you have debts with co-signers, Chapter 13 bankruptcy can prevent creditors from going after them. Your repayment plan allows you to continue making payments without affecting the co-signer’s credit or financial situation.

Benefits of Chapter 13 Bankruptcy

Filing for Chapter 13 bankruptcy offers several advantages, including:

• Stopping Foreclosure and Repossession: Allows you to catch up on past-due payments and keep your home or car.
• Protection from Creditors: Stops lawsuits and collection efforts.
• Debt Reduction: Some unsecured debts may be reduced or eliminated after completing the repayment plan.
• Credit Score Recovery: While bankruptcy affects your credit, successfully completing a Chapter 13 bankruptcy plan can help rebuild your financial standing.

How to Determine If Chapter 13 Bankruptcy Is Right for You

Deciding to file for Chapter 13 bankruptcy is a major financial decision that should be made with careful consideration. Here are some steps to help determine if it's the best option for you:

• 1. Evaluate Your Finances: Take a close look at your income, expenses, and debts to see if you can realistically commit to a repayment plan.
• 2. Consult a Bankruptcy Attorney: An experienced lawyer can review your situation and provide legal guidance.
• 3. Compare Other Debt Relief Options: Consider alternatives such as debt settlement, credit counseling, or Chapter 7 bankruptcy before making a decision.
• 4. Understand the Commitment: Be sure you can follow the repayment plan for the full three to five years.

Contact Our Team Today

At Lazarus Law, we understand that financial difficulties can be overwhelming. Our experienced bankruptcy attorneys can guide you through the process, helping you decide if Chapter 13 bankruptcy is the right solution for your financial situation. We provide personalized legal advice and assistance with filing your case, ensuring you have the support you need every step of the way.

If you're struggling with debt and wondering if Chapter 13 bankruptcy is right for you, we’re here to help. Contact Lazarus Law at (717) 298-0852 to get started with a consultation and take the first step toward financial stability today.