Introduction:Aside from the obvious ruining of your credit, there are other reasons why you need to be very cautious and thoughtful about what you are considering.
Chances are the reason you file for Chapter 13 bankruptcy is because you happen to be one of the fortunate folks who is actually employed, and you have failed the means test for a Chapter 7 bankruptcy. When you enter into the budget part of the bankruptcy, be aware that you really don't have a lot of say so in where and how and how much of your income is taken. The trustee may decide that you have to hand over your mortgage, car payments and other payments over to him or her in addition to the ordered amount needed to pay back your debt. The money leftover for you to pay your utilities, groceries, clothing and other expenses may amount to VERY little.
Don't think for a minute that you will be spared the feeling of humiliation. The whole process is humiliating. From the first meeting with a condescending bankruptcy lawyer, to the haughty attitude of a trustee, to having your name printed in the local newspaper, to having it listed on your property taxes. It is all out there for everyone to see. Not to mention the humiliation you might feel if you have children who don't understand that there is no money for anything extra. In Chapter 13, lawyers tout that you get to keep all your things, but in the process, you tend to lose your dignity.
In the previous list, I stated that you get to keep your things when you file for Chapter 13, however, be warned that you may have to sell some of your most precious possessions like jewelry, coins, tools, musical instruments, whatever you might have that might bring in a little cash. This may be a necessity some months when you need grocery money.
Once you file for bankruptcy, there are no safety nets left. If an unexpected expense comes up, like your furnace breaks, or you have a car accident, you no longer have the safety net of a credit card to help cover those kinds of expenses. Sometimes the fear of the future is unbearable.
If you are married, plan on this being the roughest five years of your lives. Your marriage is not immune to difficulty during this time. Make sure you talk about what is going to happen, and what the plan will be if things get too rocky. Surround yourself with people who support you and can encourage you.
Let's face it, we all make mistakes. Money mistakes can be devastating, and many times (as in my case) leaping into a bankruptcy before exhausting all other options is unwise. Before falling for the tv lawyers claims to get you out of debt with affordable payment plans, PLEASE seek help with a not-for-profit consumer credit counseling agency. They may be able to help you and your credit and reputation will not be ruined. Also, make sure you have a lot of support, join a synagogue or church or some sort of support group so you can talk about things. Do not enter into any bankruptcy without careful thought and lots of prayer.
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