• As you consider the prospect of filing for bankruptcy, it is important for you to weigh and balance the pros and cons of the different options available to you. For example, you can file a Chapter 7 bankruptcy and obtain a liquidation of your debts. You can file a Chapter 13 bankruptcy and pay off your debts over time. Although there are positive aspects associated with a Chapter 13 bankruptcy, there are negative aspects as well.
  
  

Ongoing Debt

• Unlike a Chapter 7 bankruptcy that liquidates your debt, you remain obligated to your creditors through a Chapter 7 bankruptcy case. You do not obtain the more immediate relief available in a Chapter 7 proceeding.
  
  You are required to pay off the money you owe to your creditors over two to five years. The bankruptcy trustee obtains a single, comprehensive payment from you on a monthly basis that is distributed to your creditors.
  
  

Trustee Oversight

• Due to the ongoing debt obligation associated with a Chapter 13 bankruptcy, the trustee maintains an active role in your financial life during the life of the repayment plan. The bankruptcy trustee is the court official designated to oversee the day to day progress of Chapter 13 payment plans.
  
  You will be required to provide the bankruptcy trustee detailed information about your income, expenses and assets on a regular basis. Moreover, the bankruptcy trustee has the power to compel you to court to testify regarding your financial status at her prerogative.
  
  

Credit Freeze

• Another negative aspect of a Chapter 13 bankruptcy is that you will be unable to obtain any new credit while you are paying off the court-ordered plan. Barring a truly significant emergency, the bankruptcy trustee will not grant approval for you to obtain a loan or any other type of credit. Indeed, you are not permitted to make a home appliance purchase on an installment plan.
  
  Additionally, prospective lenders and creditors will see that you are in the midst of a Chapter 13 repayment process and will deny an extension of credit to you--even if you are able to gain approval from the bankruptcy trustee.
  
  Because a Chapter 7 bankruptcy discharges your debt, a potential lender will see that you do not have any active debt obligations. Additionally, under tighter rules enacted in 2005, you are not able to file for a subsequent Chapter 7 bankruptcy for at least eight years after being discharged from that type of case.