As your debt mounts and your financial situation worsens, you may begin to consider the pros and cons of bankruptcy. With Chapter 13 bankruptcy, you are able to keep most your assets, while repaying some of your debt through a repayment plan.
Also known as reorganization bankruptcy, you will pay back creditors over a period of three to five years. This may be a longer process than Chapter 7, but it is the right choice for those who want to keep their assets and make good with creditors.
Even though most of the Chapter 13 bankruptcy process is straightforward, it does not mean there are no challenges lying ahead.
Here are some of the most common mistakes, many of which have sunk people in your position in the past:
- Adding to your current debt load. Once you decide to file for Chapter 13 bankruptcy, you should stop using your credit cards. Along with this, don’t take cash advances or apply for new loans.
- Believing that timing does not matter. There are many factors to consider, including just how bad your financial decision has become. For example, if you are faced with foreclosure and/or wage garnishment, waiting any longer may be a mistake. On the other hand, if you can get by for the time being, it may make more sense to wait, especially if new debts will be added to your current load in the near future.
- Not filing the appropriate paperwork. There is a lot of paperwork associated with Chapter 13 bankruptcy, and you need to provide the court with everything they require. If you neglect to do so, your case could be dismissed. Is that a risk you want to take?
If you are worried about making one or more of these mistakes, among others, put your mind at rest by consulting with a Chapter 13 bankruptcy attorney. We have helped many people like you file for bankruptcy and improve their financial situation in no time.