Chapter 13 Bankruptcy, also known as a “wage earner’s plan,” allows an individual to develop an installment plan and repay their debts over a period of time. Although this chapter offers several advantages over Chapter 7 Bankruptcy, some people hesitate to file due to common myths and misconceptions about the process. For over 25 years, Groce & DeArmon, P.C. has provided legal aid for bankruptcy cases. To clear up some confusion, our bankruptcy attorneys debunk some common myths about Chapter 13 Bankruptcy.
Myth #1. It is Difficult to Qualify for Chapter 13 Bankruptcy
Many people refrain from filing for Chapter 13 Bankruptcy because they assume they will not meet the qualifications. This is slightly misleading. While there are some strict qualifications for this chapter – including debt limits and income requirements – more people qualify than you might expect. As of April 1st, 2016, your secured debts (mortgages and liens) cannot exceed $1,184,200 and your unsecured debts cannot exceed $394,725 for Chapter 13. To see if you qualify, consult a bankruptcy attorney.
Myth #2. You are Locked into a Payment Plan
Many people believe filing for Chapter 13 Bankruptcy locks you into a specific payment plan for at least 5 years. However, this could not be further from the truth. If you cannot afford your payments, you can always modify your payment plan. Keep in mind that this can be a long and difficult process and some payments will have to remain at the same rate. If you need be, you can even convert your bankruptcy case into a Chapter 7 filing.
Myth #3. My Credit is Destroyed Worse Than Chapter 7
Whether you file for Chapter 7 or Chapter 13, bankruptcy will be on your credit report for at least 10 years. Contrary to popular belief, Chapter 13 Bankruptcy does not damage your credit score any more than Chapter 7. A Bankruptcy “discharge” is held in Chapter 13 until the completion of your payments, but credit reporting runs from the date of your initial filing.
Related Post: Chapter 7 Bankruptcy Myths
Myth #4. Filing is a Complicated Process
This myth is incredibly misleading. Filing for Chapter 13 Bankruptcy may require a large amount of paperwork and getting a payment plan approved can be difficult, but the process should not be complicated if you work with an experienced bankruptcy attorney. If you are looking for a knowledgeable bankruptcy attorney to help you develop your payment plan, contact Groce & DeArmon.
Related Post: Pros and Cons of Filing for Chapter 13 Bankruptcy
Contact Groce & DeArmon, P.C.
For over 25 years, Groce & DeArmon, P.C. has provided legal services in the Springfield, Missouri area. Our experienced bankruptcy attorneys will help you file for Chapter 13 Bankruptcy, develop a payment plan, and prepare your case for court. To set up a free consultation, contact us today at 417-862-3706.
