If your debts become insurmountable, they will probably impact most (or all) elements of your life. Overwhelming debt has even been linked to physical and psychological problems like high blood pressure and depression.
Getting out of debt and back on track is a healthy approach to your situation. Bankruptcy can help, but which type should you choose? A Chapter 13 bankruptcy can empower you to pay your debt through a structured repayment plan, but be aware of its possible risks and drawbacks.
Chapter 13 takes longer
Those expecting to complete the bankruptcy in a few short months should consider Chapter 7 instead of 13. The repayment plans in Chapter 13 can take three to five years to complete. Most consider this a significant downside to Chapter 13.
Reliable income is critical
You risk failure if you have doubts about your ability to earn during a Chapter 13 bankruptcy. It cannot work if you get fired or laid off and can no longer meet the terms of your repayment plan. Before filing, you should be confident that you have a steady income for at least five years.
Low success rate
Chapter 13 bankruptcies have a poor success rate, especially when filers do not have legal guidance. One recent study showed that legal representation raises the success rate from just over 3% to almost 70%. Experienced counsel can help you identify any issues that could interfere with completing your repayment plan.
Continue learning more about your bankruptcy options for overcoming debt in Alabama. With reliable information, you have a better chance of choosing the type that will give you the most effective financial relief.