• When struggling financially, many consumers choose to seek bankruptcy protection. Those with assets that they wish to protect or with an interest in repaying a portion of their debts typically file a Chapter 13 bankruptcy. While a Chapter 13 case has its advantages such as the ability to keep a home and manageable payments, filers will also have to face the disadvantages that come with filing for bankruptcy protection.
  
  

Repayment Plan

• During a Chapter 13 bankruptcy filing, debtors are required to enter a repayment plan that is determined by the bankruptcy trustee. This plan examines the debt obligations of the debtor along with his income. Under the plan, the debtor will be required to make equal monthly payments to the bankruptcy trustee that include payments toward debt, trustee and court fees and attorney fees. Obtaining any additional credit such as a loan for an auto purchase requires trustee approval and can be declined if the trustee feels the debtor will not be able to meet payment obligations. If a debtor misses a payment, the trustee has the right to dismiss the case. Depending on the specifics of the bankruptcy case, the filer will be in a repayment plan for three to five years.
  
  

Credit Reporting

• A Chapter 13 bankruptcy case affects the filer's credit report negatively. The bankruptcy petition will remain on the filer's report for seven years including after the case has been discharged. The negative entry on the report can lead to difficulties obtaining new credit after the case is discharged, as well as higher interest rates on new loans and credit card accounts. Individuals will also not be able to qualify for a mortgage for at least two to three years after the case is discharged, depending on the lender's requirements.
  
  

Income Scrutiny

• While in a Chapter 13 bankruptcy case, the income of the filer is scrutinized for the duration of the case. A raise in pay can cause the bankruptcy trustee to re-examine the case and raise the monthly payment amounts. Also, a large payment such as an income tax refund or an inheritance can be seized by the trustee in order to repay creditors during the repayment time period. In addition, a Chapter 13 bankruptcy requires that the filer have means to repay the debts listed in the filing; if the debtor loses her job and is unable to find employment, the case can be dismissed.