Pros and Cons of Filing Chapter 13 Bankruptcy

With the pandemic going on for more than 6 months and lockdowns being implemented here and there resulting in detrimental losses for various businesses, it is inevitable that some of them may start filing for bankruptcy. Mounting debts aside, many will also find it difficult to support their families and provide their daily needs alongside keeping their business afloat. So if you are one of those people and you are thinking about filing for Chapter 13 bankruptcy in Baltimore, it’s time to hire the services of a bankruptcy lawyer.

But first, what is Chapter 13 bankruptcy?

Also called the wage earner’s plan, Chapter 13 bankruptcy enables individuals who have a regular income to create a repayment plan to repay all or some of their debts. The repayment plan will allow debtors to make installments to their creditors for over three to five years. However, there are also other aspects that factor into creating a proper repayment plan so you will need the help of a Baltimore bankruptcy lawyer to develop a good one. But just like other forms of bankruptcy, there are pros and cons that come with filing for Chapter 13 bankruptcy.

Here are some of them:


  • The most commonly known benefit of this type of bankruptcy is its ability to stop homes from being foreclosed. Once borrowers have fallen behind on their mortgage, banks usually demand that they pay back their full mortgage arrearages. But this simply isn’t possible for families who are struggling financially and that’s why they lose their homes to foreclosure. However, Chapter 13 bankruptcy allows them to keep their home and develop a repayment plan to the mortgage company instead.
  • In relation to the benefit mentioned above, Chapter 13 bankruptcy allows you to dictate the terms on how you will pay back past-due mortgage payments. 
  • Although it will take you longer to pay off your debts with this type of bankruptcy, you will also have more time to pay. If you are lucky, Chapter 13 trustees may even be flexible regarding your payment terms.


  • Although you have more time to pay your debts under Chapter 13 bankruptcy, it also means that all of your disposable income will go towards your repayment plan. This means you are obligated to commit every penny after spending on necessities toward paying back creditors. 
  • This type of bankruptcy may not be right for you if you are a business owner since you can’t use it to reorganize debt. However, you can still file this type of bankruptcy as an individual and include business-related debts that you are personally liable for. The exceptions to this rule are stockbrokers and commodity brokers, as they are not allowed to file this type of bankruptcy for their personal debts.
  • This can stay on your credit report for up to 10 years, and you will lose all your credit cards.

Now, to find out whether you qualify for Chapter 13 bankruptcy, call Attorney Richard Hackerman and he will help you out. He is a Baltimore-based bankruptcy attorney who can help you build a strong case. Call us at 410-243-8800 and get started today. 

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