Should I file Chapter 13 if I haven’t made any late payments to creditors?

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Should I file Chapter 13 if I haven’t made any late payments to creditors?

I make 100K/year and am 50K in credit card debt. I am able to pay the minimum on my credit cards each month, but end up using that credit to get by. Most people who file bankruptcy are behind on payments. Is the same relief provided to people who are current on their bills? Just don’t want to go through Chapter 13 if, for example, debt is reduced by only $10K.

Asked on July 27, 2011 Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

There is no legal requirement that one be already behind on bills before filing Chapter 13 (or, for that matter, Chapter 7), so you *can* file. Whether you should or should not is a different story, and depends upon whether you could, if you aggressively budgeted, work down your debt, or if the total you owe (e.g. including car, home, etc. as well as the credit-card debt) is too much. You should consult with a bankruptcy attorney--many will provide a free initial consultation--to explore your options, understand better what the pros and cons of filing bankruptcy are, etc. As a general matter, if you have enough income that you *could* repay the debt over a few years, even if the doing so is painful, Ch. 13 won't help you much; the court ordered payment plan will probably not be too different from what you could do yourself with a tough budget.


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