Posted on May 27, 2009 at 11:43 am Who should file Chapter 13 Bankruptcy and why would this be a good idea for someone?

Posted on May 27, 2009 at 12:12 pm I would say Chapter 13 is arguably the least sensible debt relief option that is available for consumers. For one- it is very similar to a debt management plan in the fact that it is ultimately a payment plan, over 5 years typically, in which the debtor makes monthly installment payments until the debt (most often) is paid back in full. Except, I believe with Chapter 13 a court appointed trustee disperses the payment to each of the person's creditors and takes some of that payment for a fee. Wow, what relief! Considering the fact that Chapter 13 is far worse to have on your credit report, why not just go with a credit counseling company instead?

Posted on May 27, 2009 at 1:17 pm Big Mike makes some good points. However, for people who are struggling with secured debts such as a mortgage or car note (and do not want to lose those assets) and have no other options, Chapter 13 may be something to think about. Also, you have to keep in mind the people who no longer qualify for Chapter 7 but need to file bankruptcy because it is their only realstic option may also have to consider this as an option. Like Big Mike said however, if you are not struggling with secured debts, it really does not make a whole lot of sense to file Chapter 13. Why not fill out a form to see what your best option is? I know that DestroyDebt.Com offers free consultations!

Posted on May 27, 2009 at 4:00 pm Another thing to consider in regards to Chapter 13 is the fact that the success rate for people completing their installment repayment plan is extremely low. The reason? The bankruptcy court reserves the right, I believe, to dismiss the case if the debtor fails to make all of their payments. While I know that the court appointed trustee will usually only ask the courts to dismiss the case if consectuive payments are missed, it is still a scary thought. So you could be making payments for two and a half years, miss one lousy payment, and then BAM! Right back where you started. Tough deal if you ask me. Sounds like the success of Chapter 13 is about the same as credit counseling, would people agree?   

Posted on May 27, 2009 at 8:04 pm

Posted on May 27, 2009 at 8:06 pm  

Posted on May 28, 2009 at 12:52 am Consumers file for bankruptcy ( Chapter 7 or 13) sometimes to avail of the "automatic stay" or a law that prohibits the creditors from contacting the consumers. For Chapter 13, as long as the stay is in effect, the consumer is free to find ways to earn, save, and pay off his/her debt without being harassed by collections.In connection to that, if some of the consumer's secured assets, say his/her home is in danger of being foreclosed, once his/her bankruptcy petition is granted, the foreclosure procedure ceases too--regardless of its stage. Temporarily.And then there are some consumers who file Chapter 13 because the legal fees can be paid through the plan.Remember though that bankruptcy should always be the last option to get out of debt. If you want to get a better perspective of your financial situation, fill out the form above, and get a free assessment.

Posted on June 25, 2009 at 7:44 am It sounds like someone who should file Chapter 13 should consider credit counseling instead. Do people agree with that?

Posted on July 8, 2009 at 3:00 am Judd, Chapter 13 actually works similarly with a credit counseling program, as discussed earlier. I believe one good thing about choosing not to file is that your credit report won't be as shattered, as compared to filing for bankruptcy. Credit counseling also allows your accounts to go back to current status.I am not entirely certain if the same would apply under the Chapter 13 repayment program. If anyone will verify this, it will be greatly appreciated.

Posted on July 8, 2009 at 6:35 am In a Chapter 13 bankruptcy, the debtor makes one monthly payment to a court appointed trustee who is handling the case. This trustee then disperses monthly payments to each of the owed creditors. Regardless of who should file Chapter 13 and who should not, keep in mind that because the repayment structures of both Chapter 13 and credit counseling are essentially the same, lenders view both in a similar light. Of course, a bankruptcy is worse to have on your credit report than a bankruptcy but that is something to keep in mind.