If you are experiencing significant financial difficulties, it may be in your best interest to file for Chapter 13 bankruptcy. Doing so may put a temporary end to creditor collection efforts such as attempting to foreclose on your Texas home. However, you will spend at least three years repaying creditors, and in that time, you may encounter difficulties adhering to the terms of your proposed repayment plan.
Should you ask to be released from the plan ahead of schedule?
It may be possible to obtain a hardship discharge, which may eliminate some of your outstanding debt balances prior to the scheduled end of your repayment period. However, unsecured creditors may still need to be paid at least what they would have received had you filed for Chapter 7 protection. Therefore, you might not actually save any money by seeking an early discharge.
You could lose significant legal protections
Ending a bankruptcy proceeding could leave you vulnerable to creditor collection activities. Furthermore, you may leave those who cosigned on a loan with you vulnerable to actions such as a repossession or a lawsuit. It’s also important to consider that exiting a reorganization proceeding early might have an impact on your ability to file for bankruptcy in the future. Your attorney may be able to provide more insight into the other potential negative consequences of seeking an early discharge.
If you are struggling to stay current with your debt, bankruptcy may put you a step closer to building a stronger financial future. An attorney may be able to help you fill out bankruptcy paperwork, talk about the different types of protection available and answer any other questions that you might have.