3 Myths about Chapter 13 Bankruptcy

For many Americans, bankruptcy has a strongly negative connotation, conjuring images of home foreclosure and permanent destitution. In fact, though, bankruptcy is actually an extremely useful tool for individuals with overwhelming debt obligations. For many of these people, bankruptcy is the only viable option for returning to financial freedom, and they frequently discover that the process is much less painful than they had imagined it might be. Bankruptcy’s negative reputation is likely due to outdated ideas and outright misconceptions about the process. This article is meant to correct some of the most common myths about Ch. 13 bankruptcy.

Myth: If I file for Chapter 13 bankruptcy, I will have to repay all of my debts.

Fact: Chapter 13 bankruptcy is a form of bankruptcy under which an individual’s debts are reorganized in a way that will make repayment more manageable. For some people, this may imply full repayment of debts. However, most of those who file for Chapter 13 bankruptcy cannot fully afford to repay their debts, and may have many of them discharged.

Myth: If you pass the means test, you cannot file for Ch. 13 bankruptcy.

Fact: Passing the means test has no effect on a person’s ability to file for Ch. 13 bankruptcy; it simply means that they are also eligible to pursue Chapter 7 bankruptcy, which involves asset liquidation and debt discharge.

Myth: The trustee creates the repayment plan that you must follow.

Fact: In bankruptcy, the court often appoints a trustee to oversee the case. However, the repayment plan in Chapter 13 bankruptcy is created by the debtor, not the trustee, though the trustee does have the right to reject a proposed repayment plan.

Contact Us

If you or someone you know is struggling with overwhelming debt, you should consider the benefits of pursuing bankruptcy protection. Contact the New Orleans Chapter 13 bankruptcy lawyers of the Law Office of David D. Kervin, Jr., at 504-599-5906 today to discuss your situation with an experienced member of our legal team.