When residents of Mississippi struggle with debts and begin to consider declaring bankruptcy, they have two main options. The first is Chapter 7, colloquially known as liquidation bankruptcy. The second is Chapter 13, commonly called wage earner's bankruptcy. Looking at Chapter 13 specifically, how will you know if it's a good fit for you?
The United States Courts highlight the numerous advantages of Chapter 13 bankruptcy. As an example, foreclosure proceedings can be stopped the moment someone files. Delinquent mortgage payments can even be cured over time. Additionally, other secured debts can be rescheduled so that they can be paid off in more manageable chunks spread out over a longer period of time. This can be helpful to those who have found themselves with multiple sources of debt.
FindLaw, on the other hand, notes that there can be disadvantages to Chapter 13 bankruptcy as well. First, it's not going to be a sustainable option for a person who doesn't have a steady and reliable source of income. Chapter 13 relies on someone being able to craft and stick to a new payment plan. This can't happen if the source of income is not dependable. It can also impact a person's credit score, dropping them anywhere from 160 to 220 points on average.
For some, the benefits of Chapter 13 bankruptcy are worth the potential drawbacks. For others, those downsides may be enough to make them seek out alternative solutions to their debt. In either case, there are always both pros and cons. Those considering filing for bankruptcy should carefully research all of their options.