Debtors who are looking to file for bankruptcy are usually debating between
chapter 13 and chapter 7 bankruptcy. While each has their pros and cons,
and will benefit different people based on their unique situation, many
people find chapter 13 bankruptcy to be preferable as this allows them
to develop a repayment plan in which they would repay their debts over
a 3-5 year period, instead of immediately having to liquidate their assets
to pay for their debts. Here are just a few of the benefits of choosing
chapter 13 bankruptcy.
Perhaps the greatest benefit of chapter 13 bankruptcy is that it can allow
individuals to save their home from foreclosure. By filing chapter 13,
individuals can stop foreclosure proceedings and are given the opportunity
to make up for missed payments on mortgages and car loans over time. However,
to avoid foreclosure you will have to be able to continue to make mortgage
payments on time during the chapter 13 plan period. Chapter 7, on the
other hand, is not as forgiving and likely will lead to foreclosure, which
is why many people looking to keep their homes prefer chapter 13.
When considering the long-term consequences of chapter 13 vs chapter 7
bankruptcy, chapter 13 is often considered to be more favorable as it
does not stay on your credit history for as long. While creditors will
see that you filed for chapter 13 bankruptcy for 7 years, chapter 7 will
show on your records for 10 years. While three years may not seem like
that big of a difference, those extra three years can mean three years
where it is harder for you to get a vehicle, rent a house, or get a credit card.
For many people, the more forgiving nature of chapter 13 bankruptcy makes
it a more favorable option. If you are considering filing chapter 13 bankruptcy,
this overview of the basics of chapter 13 bankruptcy, and
contact us to find out about how we can help you during this difficult time.