Chapter 13 Bankruptcy Lawyer
Chapter 13 bankruptcy is often misunderstood and surrounded by myths that can deter individuals from considering it as a viable solution to their financial problems.
Myth 1: Chapter 13 Bankruptcy Is The Same As Chapter 7 Bankruptcy
Reality: Chapter 13 and Chapter 7 are distinct bankruptcy chapters with different purposes and outcomes. Chapter 7 involves the liquidation of assets to pay off creditors, while Chapter 13 focuses on restructuring debts through a manageable repayment plan. Chapter 13 allows individuals to keep their assets and create a structured plan to repay their debts over a period of three to five years.
Myth 2: Only People With No Assets Can File For Chapter 13
Reality: Chapter 13 bankruptcy is not just for those with no assets, as a trusted lawyer, like a Chapter 13 bankruptcy lawyer knows. It is often chosen by individuals who have valuable assets, such as a home or car, that they want to protect from liquidation. Chapter 13 allows debtors to retain these assets while making affordable payments to creditors through the court-approved repayment plan.
Myth 3: All Debts Are Eliminated In Chapter 13
Reality: Chapter 13 does not eliminate all debts outright, as lawyers from a law office like Therman Law Offices, LTD know. Instead, it provides a structured plan to repay a portion of the debts over time, typically three to five years. Certain debts, like child support, alimony, tax debts, and student loans, may still need to be paid in full, but the plan can make it more manageable by extending the timeline and consolidating payments.
Myth 4: Chapter 13 Ruins Credit Forever
Reality: While Chapter 13 bankruptcy will have a negative impact on your credit score initially, it does not result in permanent damage. Many people find that they can start rebuilding their credit shortly after their case is completed. By making on-time payments and managing credit responsibly, individuals can gradually improve their creditworthiness over time.
Myth 5: Filing For Chapter 13 Is A Sign Of Financial Failure
Reality: Financial difficulties can happen to anyone, and seeking help through Chapter 13 bankruptcy is a responsible and legal way to address these challenges. It is not a sign of failure but rather a proactive step towards regaining control of one’s financial future. Many successful individuals and business owners have used Chapter 13 to restructure their debts and move forward with their lives.
Myth 6: Chapter 13 Is A Quick Fix
Reality: Chapter 13 bankruptcy is a process that typically lasts three to five years, during which individuals make consistent payments according to their court-approved plan. It requires commitment and discipline to complete successfully. While it provides relief from immediate creditor actions, it is not a quick solution to financial problems.
Chapter 13 bankruptcy is a valuable tool for individuals seeking to manage and repay their debts while protecting their assets. It is essential to consult with a bankruptcy attorney to understand the specific requirements and benefits of Chapter 13 based on individual financial circumstances. Dispelling these myths can help individuals make informed decisions about their financial future and consider Chapter 13 bankruptcy as a viable option for regaining control over their finances. Reach out to a trusted law firm for help today.