Chapter 13 bankruptcy not always the right debt relief option

On Behalf of | Oct 5, 2017 | personal bankruptcy |

As many Illinois residents know, facing financial difficulty is nothing short of challenging. It can leave an individual feeling overwhelmed and hopeless, while at the same time they are overly stressed with trying to find a way to dig themselves out of debt. Although some of these people are able to get themselves out of debt, others only find themselves falling into a deeper hole. When this is the case, it might be wise to seek debt relief. This may include filing for personal bankruptcy.

Yet, choosing the right type of bankruptcy is critically important to an individual’s financial security. To see just how important this decision can be, one need only look at recent bankruptcy statistics in the Chicago area. According to reports, Chapter 13 bankruptcy filings amongst African Americans have skyrocketed. Under this type of bankruptcy, debtors are required to make repayments for a period of five years. A Chapter 7 bankruptcy, on the other hand, allows debt to be discharged after a significant period of an individual’s assets are liquidated.

So why do experts think that African American communities are filing for Chapter 13 bankruptcy more frequently? Simply put, many low income individuals, including those who live in the inner city, rely on their vehicles to get to work. Since Chicago’s inner-city African Americans are subject to perhaps a disproportionate amount of parking tickets, many of which debtors are unable to pay, these individuals find themselves at risk of losing their licenses. Since Chapter 13 bankruptcy stays all repossessions and suspensions, many of these individuals turn to this type of bankruptcy in hopes of retaining their vehicle and, thereby, their jobs.

Although Chapter 13 bankruptcy may be right for some, it is not the right debt relief option for all. Therefore, those who find themselves facing overwhelming debt should discuss their current situation, as well as their hopes for the future, with an experienced bankruptcy attorney who may be able to provide beneficial guidance.