One Benefit Of Chapter 13 Bankruptcy Is Flexibility

Since the New Year has began, the numbers for 2010 bankruptcy filings is in. It's no surprise that last year set a record for the most Americans ever filing bankruptcy. Unemployment now sits at 9% and much of the media keeps reporting that things are getting better. The numbers don't lie. Although most of the people file under Chapter 7 bankruptcy, there has become a lot of interest in Chapter 13. Pride is something that holds many individuals to hang on way longer than they should because they don't feel right about walking out on their debts. A Chapter 13 bankruptcy has the ability to allow the debtor to negotiate the repayment of their debts to the creditors. This allows the debtor to save face, at least in their own mind.

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The flexibility of a Chapter 13 bankruptcy has gotten a lot of attention from debtors in the recent years. Since the bankruptcy code changed back in 2005, it's become tougher to qualify to file Chapter 7. This has forced many people to take another look at Chapter 13 bankruptcy. One of the biggest advantages to filing Chapter 13, is the ability to change your payment plan even after the case is filed. Since the payment plan is set up to run over a 3 to 5 year period, the court understands that sometimes a person's financial situation might change. If the debtor has a change in their income or expenses during the course of a Chapter 13 bankruptcy, the debtor can apply to modify their plan to allow them to afford the payment plan. It has to be submitted to the court and in most cases it will be approved. In today's economy many individuals have suffered a reduction in pay that would kick them out of their chapter 13 plan if they couldn't modify it.

Nowadays many families are suffering financial setbacks and might have to give a car back to the bank while being in the middle of a chapter 13. Being allowed to change midstream is one of the benefits of this type of bankruptcy filing. Think back five years and see all of the changes that happened in your life. Having the ability to negotiate can be very beneficial in today's economy. Banks don't really want to foreclose on properties and nor does lenders want to repossess cars. This gives the debtor extra power with the backing of the bankruptcy court. In some cases the debtor will be able to refinance or modify a mortgage or even negotiate a reduction on the payment amount on your vehicle so you can afford keep it.

Filing Chapter 13 bankruptcy can be very complicated and it is advised to be represented by a bankruptcy attorney. A bankruptcy attorney that specializes in Chapter 13 will have the experience in negotiating and protect their client to the full extent of the bankruptcy law. When deciding to file bankruptcy, always take the time to discuss with a bankruptcy attorney the possibility of your income declining or your expenses increasing over the next few years. This will give the attorney a good knowledge of what could possibly happen in the near future and how to adjust for it.

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