Many people who can no longer pay their financial obligations realize they have to file for bankruptcy. A significant percentage of these men and women want to file Chapter 13, which is a repayment program. They are uncomfortable with Chapter 7, which discharges all debts that qualify, essentially erasing those obligations. One job of bankruptcy lawyers in Montgomery, AL is to provide counsel as to when Chapter 13 is really not feasible.
The Problem With Chapter 13
Unfortunately, a large number of men and women who file for Chapter 13 default on the program because they eventually cannot keep up with all the obligations. The court only allows this filing if they have enough income to make those payments and maintain current obligations, but often, that turns out to only be theoretical. One financial problem that crops up can derail the entire plan. The best bankruptcy lawyers in Montgomery, AL warn clients about the potential pitfalls of Chapter 13.
Those who sign up for Chapter 13 are well-intentioned, planning to pay back all the debt they owe in an arrangement lasting up to five years. The problem is that it often leaves people living paycheck to paycheck, struggling to make ends meet while making those hefty payments in the bankruptcy program every month. Some begin falling into the debt trap all over again. They may take out a payday loan for an emergency car repair, for example.
It’s crucial for people to be realistic and take a very hard look at their financial situation when they consult with an attorney at law such as David Weston. Hope and optimism are admirable qualities, but they will not get someone through a five-year payment arrangement that is just barely affordable.
Thinking clearly may be tough for someone in this situation. They may have been feeling desperate for quite some time, making every possible effort to not completely default on the obligations they have taken on. They see Chapter 13 as their one chance to do the right thing. Chapter 7, however, is a completely acceptable option for someone who needs a fresh start.