The Pros and Cons of Chapter 13 Bankruptcy in Minnesota

Posted by Wesley Scott on June 26, 2019 at 11:16 PM
Wesley Scott

Chapter 13 bankruptcy is a repayment plan that sets up debtors with a payment plan to pay off some of or all of their overwhelming debt. It is a longer term commitment than a Chapter 7, lasting 3-5 years as opposed to 3-6 months and that tends to make potential filers balk at filing a Chapter 13.

While filing a Chapter 13 bankruptcy may not be a debtor’s first choice considering that the shortest plan one could be on lasts three years, a Chapter 13 arguably has less ‘cons’ than a Chapter 7 bankruptcy. These negatives do tend to be deal breakers for many debtors though.

The bottom line is that you are in a bankruptcy for 3-5 years depending on your plan and making monthly payments towards your debt for the duration of that.  That is 3-5 years before your debt (the remaining debt not paid off in your plan) is discharged and gone.

Understandably, many debtors don’t want that burden on them for years but stepping back and taking in the whole picture highlights all of the positive aspects of filing a Chapter 13.

First off, though you are making monthly payments for 3-5 years, any debt not paid off after that is gone-wiped out tax free no matter if it’s $100 or $10,000. Also, all of your attorney fees are paid through the plan. No need to worry about an additional monthly payment.

Like a Chapter 7 bankruptcy, filing a Chapter 13 stops creditor calls, letters, harassment, and prevents foreclosures and repossessions. Added bonuses to a Chapter 13 are that 1) debtors lose no assets whether they are exempt or non-exempt and 2) filing a Chapter 13 bankruptcy also protects any co-signers a debtor may have.

The best way to weight the pros and cons of a Chapter 13 bankruptcy is to have an experienced attorney look over your situation and explain how filing would affect you.


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