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Q.What are some of the disadvantages to the Chapter 13 bankruptcy?
A.Although Chapter 13 debtors often keep property they would have lost had a chapter 7 bankruptcy petition been filed, the chapter 13 is not without its disadvantages. In a chapter 13 bankruptcy, the debtor remains under court supervision for the life of the bankruptcy plan (typically 3 to 5 years). During this period, the debtor is restricted from incurring new debt and from selling any assets without court permission. If the Chapter 13 plan calls for less than full payment to the debtor's unsecured creditors, the debtor will be required to live on a budget for the life of the plan. In addition, the plan payments may be deducted directly from the debtor's salary. If, for any reason, the plan payments are not made, the court may dismiss the bankruptcy case, or allow a secured creditor to reclaim his property. Finally, even if you make all of your plan payments, and even if your plan requires the payment of all your creditors in full, the chapter 13 bankruptcy will appear on your credit report for 7 to 10 years.
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