One of the most personal areas of an individual’s life is their finances. When times get tough and paying debts becomes almost impossible, filing for Chapter 13 bankruptcy in Kentucky is often the only way out. Because it is such a big decision to make, however, you should first understand the benefits and potential disadvantages.
The advantages of filing for Chapter 13
One of the biggest advantages of filing Chapter 13, aka wage earner’s bankruptcy, is the ability to pay off debts over a long period of time. Now, this might sound like a disadvantage to those who want to quickly get rid of the debt. However, when you prolong the payments, you also have more time to pay them off. In addition, Chapter 13 trustees will also be placed in a better position where they can offer you a lower amount to pay each month.
Note that if your income surpasses your state’s median income, you must pay everything using a five-year payment plan. If your income is below that medium-income number, then you might be asked to get on a three-year plan. Lastly, when you file for Chapter 13, you have the option of either sending back property that you’re making payments on or keeping them.
Disadvantages of filing for Chapter 13
Perhaps the most frustrating part is that you’ll have little to no money left over after the necessities have been paid. This is because one of the orders of Chapter 13 includes having to use all your disposable income to pay off your debts. This can cause some worry in people as they cannot save money or use credit for emergency purposes. Furthermore, you won’t be able to get a mortgage. Although some banks do provide mortgages to individuals going through bankruptcy, they are often riddled with high numbers in terms of interest rates and monthly payments.
No one should ever have to go through bankruptcy alone. Before you file, reach out to a lawyer who can explain your options and help you through the process.