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The pros and cons of filing for Chapter 13 bankruptcy

If you have found yourself here on this blog, chances are good that your financial situation is dire. If you are considering filing for Chapter 13 bankruptcy, you should understand the pros and cons. First, the pros.

-- You get longer to repay your debts.

-- As long as you continue to make payments, you can keep the property you're paying for.

-- Once your payment plan is met, creditors can't come after you for the full amount originally owed.

-- There is the possibility of more flexibility with your payments, e.g., extending the length of your payment plan, surrendering property you no longer wish to make payments toward, lower your payments, etc.

-- Unlike filing for Chapter 7 where you have to wait six years to file again, if the need arises, you can refile again for Chapter 13 without waiting.

-- Getting creditors off your back and stopping those calls is a huge relief.

Now the cons:

-- You might not pay off your debts for five years.

-- Repayment of your debts comes from your disposable income, i.e., what's left after you have covered the necessities, like shelter, food, medical needs. This pretty much guarantees that you will be broke during the entire repayment period.

-- Plan on having your Chapter 13 show up on your credit report for the next decade.

-- Mortgage lenders will not want to loan you money to purchase a home.

-- Filing for bankruptcy can be a demoralizing experience,

To learn whether filing for bankruptcy is appropriate in your situation, seek the advice of a bankruptcy law professional. He or she can review your financial outlook and devise a plan that best meets your fiscal needs.

Source: Findlaw, "Pros and Cons of Declaring Bankruptcy under Chapter 13," accessed Dec. 09, 2016

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At the law offices of William H. Oliver, Jr. & Associates in Toms River and Lakewood, New Jersey, we represent clients in Toms River, Neptune, Trenton, Middletown, Red Bank, Wall, Lakewood, Lakehurst, Manchester, Asbury Park, Old Bridge, Jamesburg, Barnegat, Forked River, Manahawkin, Ocean Township, Brick, Manasquan, Howell, Freehold, Hazlet, Bradley Beach, Brown Mills, Long Branch, Keansburg, Marlboro, Bayville, Beachwood, Whiting, Sayreville, South River, East Brunswick, Monmouth County, Ocean County, Middlesex County, Burlington County and Mercer County.