There are several types of bankruptcy in Memphis, Tennessee consumers can choose when they see no way out of debt. Chapter 7 bankruptcy is the most common, but filers must meet eligibility requirements. Chapter 13 is an option for those with a steady income who wish to protect their assets.
Chapter 13 cons
Chapter 13 bankruptcy requires the consumer to have enough disposable income to pay debts and not exceed debt limits. Most all of their disposable income will go toward the payment plan after allowable expenses are deducted.
They may be required to explain how they got into this situation at the 341 meeting of creditors. Bankruptcy does not remove primary mortgage liens, even after discharge, so the filer will need to stay current on payments. Filing any type of bankruptcy stays on the credit report for several years, which is seven years for Chapter 13.
Chapter 13 bankruptcy pros
Chapter 13 bankruptcy doesn’t require the consumer to sell nonexempt assets as long as they don’t miss payments to the trustee. While Chapter 7 discharge commonly occurs in four to six months, Chapter 13 allows more time. to pay. The filer may include certain tax debts, mortgages in arrears, and missed vehicle payments in the plan to catch up debt.
A co-signer often gets protection from the borrower’s debt obligation, which is a relief for them. Creditors commonly have a more favorable view of Chapter 13, since they have made efforts to repay debt. Chapter 13 bankruptcy allows the removal of second and third mortgages, or lien stripping, which is unavailable in Chapter 7.
Bankruptcy does not remove all debts, such as domestic obligations, but it gives the filer some relief. The main benefit of all bankruptcy types is the automatic stay, which temporarily prevents collection action. The filer should consider each option and the pros and cons carefully.