Becoming overwhelmed with bills is something nobody wants to go through, but millions of people every day are faced with the inability to satisfy their debts. For many people who earn over the median income for a family of their size in their area, a Chapter 7 bankruptcy is not a possibility. However, a Chapter 13 bankruptcy may be a better option. Here are several myths about Chapter 13 bankruptcy and what your next step should be.
With a Chapter 13 Bankruptcy, All Your Debts Are Erased
In a Chapter 7 bankruptcy, the bankruptcy court liquidates all of an individual’s non-exempt assets and uses those funds to satisfy creditors. Any debt left over is usually discharged or erased. However, this is not true of a Chapter 13 bankruptcy. Instead, debts are consolidated and a 3-5 year repayment plan is established by the bankruptcy court. If any debt is remaining after the repayment plan is complete, it may be discharged at that point, but it is not likely.
A Chapter 13 Bankruptcy Will Stay On Your Credit Forever
Fortunately, no bankruptcy will stay on your credit forever, no matter what type you file. A Chapter 7 bankruptcy will stay on your credit report for a maximum of 10 years. While a Chapter 13 bankruptcy also can stay on your credit report for 10 years, it is more likely that the bankruptcy will be cleared from your report after 7 years.
All Your Possessions Will Be Liquidated If You File a Chapter 13 Bankruptcy
Neither a Chapter 7 or a Chapter 13 bankruptcy requires you to liquidate all of your possessions. Under a Chapter 7 bankruptcy, only non-exempt assets will be liquidated, and many valuable assets like your home and car can be listed as exempt. In a Chapter 13 bankruptcy, however, there is no need to list your possessions as exempt or non-exempt because none of them will be liquidated. You will owe the full amount of your debts in a Chapter 13 bankruptcy, and you will be able to pay them back over a period of 3-5 years.
Contact an Experienced Chapter 13 Bankruptcy Attorney Today
If you are struggling to pay your debts and believe you make too much money to qualify for a Chapter 7 bankruptcy, there are still a number of options available to help you gain more control over your finances. By contacting an experienced Chapter 13 bankruptcy attorney, you can begin evaluating your circumstances and developing a plan to help you overcome your debt.
Ted Williams Jr. is a veteran bankruptcy attorney who has assisted hundreds of individuals and families with their debts. He can help you move forward towards a better financial future. Contact Attorney Williams today for a consultation by calling (205) 623-4443.