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Can you afford to file Chapter 13 bankruptcy?

It may seem odd to think that you cannot afford to file Chapter 13 bankruptcy, but that may happen to some people. Chapter 13 requires you to create and follow a repayment plan, so you must have enough money to honor the plan through completion, which is about three to five years. If you cannot afford to do so, the court will dismiss your case and you will be back to where you started without your debts cleared.

According to Forbes, the requirement to attend credit counseling prior to filing can help you to determine if you can afford to file Chapter 13. You will develop your repayment plan during this course. It will let you see if you have the disposable income to make a repayment plan work or if you would be better off filing for Chapter 7.

Repayment plan

You should note that you do not have to pay every debt in full under your repayment plan. You will pay debts according to priority. High priority debts you will pay in full, but you may not pay on lower priority debts at all.

Your creditors can object to your plan. You may have to revise it until the court accepts it.

Debts

The debts generally left unpaid are unsecured debts that do not fall under the priority category. This includes credit card debt. You need to have enough disposable income to repay all of your priority debts, such as taxes and child support. You should also have enough money to repay secured debts unless you are willing to lose the property you used to secure the debt.

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