Most individuals who are interested in bankruptcy immediately turn their attention to Chapter 7. They do this for one main reason: It allows them to discharge some or all of their debts, thus providing a fresh start in the near future (usually no longer than six months).
While this sounds like a great idea, you may come to find that you don’t qualify. And if that’s the case, you should turn your attention to Chapter 13 bankruptcy.
There are many reasons to file for Chapter 13 bankruptcy, such as:
- Lower debt payments in the future: You can restructure secured debts in Chapter 13 bankruptcy, thus allowing for lower debt payments over the course of your repayment plan. Best yet, when your repayment plan reaches the end, your debts will be paid off for good.
- Stop the foreclosure process: The last thing you want to do is lose your home to foreclosure. Not only will this mean you have no place to live, but it will also affect your credit for years to come. Upon filing for Chapter 13 bankruptcy, creditors are not permitted to proceed with collection activity. This gives you enough time to reconsider your situation and find a way to remain in your home.
- Seven years on your credit report: Yes, that’s a long time, but there’s something to think about. A Chapter 7 bankruptcy filing remains on your credit report for 10 years. You can rebuild your credit for the first seven years, but you won’t feel satisfied until your bankruptcy is absent from your credit report.
Don’t let the potential drawbacks of Chapter 13 bankruptcy scare you away. For example, many people shy away because they don’t want to deal with the repayment plan that eats into their monthly disposable income. It’s a valid concern, but you get a lot in return for taking on a repayment plan.
If you’re on the fence, learn more about Chapter 13 bankruptcy, including the pros and cons, and then determine if it’s best for you considering your current circumstances.
It’s a big decision, but with so many benefits it could be the solution you’ve been searching for.