bk pros cons

pros - no creditor calls, cons - horrible cr

have you looked at other alternatives?

smmu -

been there done that. Let me give you a rundown of the cons (there are very few pros to bankruptcy, trust me):

CONS (Chapter 13):
-your attorney gets paid FIRST. Not your creditors. Your attorney fees can be significant - in the neighborhood of $3,000 to $8,000. Your creditors will not see a penny until the attorney fees are paid.

-the "convenient monthly payments" allowed by Ch. 13 filing will come directly out of your paycheck in most states. There is no "wiggle room" or "I can put this off and pay it next week".

-while the creditors listed on your Ch. 13 will be getting small monthly payments throughout the course of your case (3-5 years), what do you think will happen with any NEW bills? You will have to pay them, of course, or you will be right back in the situation that got you into filing Ch. 13 in the first place. Doctor bills, vet bills, car repair bills, house repair bills, school field trips, kids clothes, holiday gifts....all of those debts keep coming, and have to be paid out what's left of your income after the Ch. 13 plan payment comes out of your paycheck.

-you do not get to say what your Ch. 13 plan payment is - there is a formula used to determine what your "disposable income" is, and that amount is what the payment is. If you move forward with filing Ch. 13, you need to be CERTAIN that you can live on what's left of your income after the plan payments start coming out of your check. They can even attach your tax refunds or bonuses from your employer, in some cases (not all). The Ch. 13 debt repayment plan is 3-5 years long - that's a LONG time to live on a severely reduced income.

-You will not be able to make any major purchases without permission from the Bankruptcy Trustee. If you need to purchase a car, you have to get permission from them first.

PROS (Ch. 13):
-debts are discharged at the end of the payment plan (3-5 years), regardless of whether they are paid in full or not. Any remaining debt on those accounts is discharged.

-your credit will recover - eventually. Plan on about 7 years for full recovery.

If I'm wrong about any of these, someone please correct me - but this was my experience with BK Ch 13.

Please consider another alternative if possible - debt consolidation or something similar. Make BK your LAST resort if at all possible. It's a long, hard road, and many do not successfully complete the Ch 13 payment plan, because of the reduced income it causes.

bankruptcy is nowhere near as bad as most people make it out to be. My credit started improving within a year and now 5 years later is almost back up to the 660 range. I qualified for a chapter 7...the best thing I ever did.

Tried to post this earlier, but it didn't go through.

BK has major cons, and few pros - here's my experience with Ch. 13:

-with Ch. 13, your plan payments come out of your paycheck (in most states) - there is no 'wiggle room' or "I'll pay this next week".

-the attorney fees get paid first - so for the first few months or so of your payment plan, your creditors get nothing - they attorney gets it all. Attorney fees can be signficant - and I mean in the thousands of dollars.

-while your creditors are getting small monthly payments, what about NEW bills? Medical, dental, car repair, house repair, school bills (books, field trips, sports), vet bills, food, housing, car payment, etc. - you will still have to pay those, or you will end up in the same boat that put you into Ch. 13 in the first place.

-your "disposable income" is what is used to pay the Ch 13 plan payments - and YOU don't get to decide how much the payment is. There's a formula used to determine your disposable income, and trust me, what you think is disposable and what the formula determines is disposable will vary greatly. You need to be sure you can live on what's left after that payment comes out - for the 3-5 years the plan lasts. That's a long time to live on a reduced income.

-you can't make any major purchases without the BK Trustee's permission. Not even a car.

Please take all this into account when you consider filing, and try to find an alternative.

oops, sorry! can someone delete that double post for me? thanks.

The big pro of Chapter 13 is you don't lose assets, providing that the unsecured creditors get as much thru the Ch. 13 payments as they would get in a Chapter 7 liquidation. The cons have been addressed above.

The pro of Chapter 7 is it's over relatively quickly. The con of Ch. 7 is you can lose assets (house, car, and more) if your equity in these items exceeds the exemption limits, set by either state or federal law. Exemptions vary by state, and in some states you can't use the federal exemptions. In some states you can come thru a Ch. 7 unscathed, while in others you will lose a lot.

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