If given the choice, many people would choose Chapter 7 bankruptcy over Chapter 13. After all, Chapter 7 offers a totally fresh start and is quicker, while Chapter 13 is longer and requires you to repay some of your debts over time. However, if you don’t qualify for Chapter 7, you shouldn’t outright dismiss the idea of Chapter 13 instead.
There are many benefits of Chapter 13 bankruptcy, including but not limited to:
- More time to make your payments: Thanks to a repayment plan, you can stretch out your debt payments, thus making them more affordable. Furthermore, once you complete your repayment plan, creditors are no longer permitted to seek payment in full.
- Less impact on your credit report: A Chapter 13 bankruptcy only stays on your credit report for seven years. Yes, this is still a long time, but it’s three years less than Chapter 7 bankruptcy.
- Save your home from foreclosure: If you’ve slipped behind on your mortgage payments, it won’t be long before you hear from your lender (if you haven’t already). While you can work directly with them to save your home, this is easier said than done. Through a Chapter 13 bankruptcy filing, you’re able to stop foreclosure proceedings for the time being. You may then be able to refinance or make up past due mortgage payments over time.
For many people, the most difficult part of filing for Chapter 13 bankruptcy is taking the first step. Once you know the process and your legal rights, all you have to do is take a step in the right direction.
Yes, a Chapter 13 bankruptcy filing is a big deal, but it’s also something that can benefit you and your finances in a number of ways. It’s something to consider if you’re in financial trouble.
