Advantages of Filing Chapter 13
If you're trying to decide if personal bankruptcy is an option for you, it's important to keep in mind that the right chapter for you - Chapter 7 or Chapter 13 - depends on a number of factors about your financial situation and your long-term goals.
If you'd like to discuss the advantages of filing Chapter 13 bankruptcy with a lawyer right now, please fill out this form. You can arrange a free, no-obligation consultation with a bankruptcy attorney near you.
What to Expect from Chapter 13 Bankruptcy
Here's a look at how Chapter 13 bankruptcy works, including some specific advantages of filing Chapter 13 rather than Chapter 7 bankruptcy.
Protect cosigners: If you have a family member who put his or her name on the line to help you get a loan or line of credit, Chapter 13 can help keep creditors from harassing that cosigner as well. In Chapter 7, on the other hand, the bankruptcy court may discharge your responsibility for a debt, but leave the other person on the hook. This protection also holds true for non-filing spouses.
- Hang on to your assets: Chapter 13 bankruptcy works by letting filers catch up on past-due debts with the help of a three- to five-year repayment plan. Because Chapter 13 filers repay many of their secured debts over time, they are not required to sell off any of their possessions to raise money to repay creditors. In Chapter 7 bankruptcy, on the other hand, the court offers filers a full discharge of certain debts but may raise money for creditors by selling a filer's non-exempt assets.
- Stave off foreclosure: Chapter 13 bankruptcy is known, among other things, for helping filers prevent or delay mortgage foreclosure. This is because of a protection called the automatic stay, which prevents creditors from taking any collection action against a bankruptcy petitioner for the duration of the bankruptcy case. Chapter 13 cases tend to last three to five years, during which time filers may either catch up on their mortgage loans or make alternative living arrangements.
- Repay your creditors (at least in part): If you have loans, including from family members or friends, Chapter 13 bankruptcy may help you repay those loans, at least in part, while still providing you with the breathing room you need to get your finances back on track. Unfortunately, you cannot decide which of your creditors you get to repay – the court ranks debts by their priority – but with regard to family and friends, you may feel better knowing that you did your best after borrowing money from a loved one.
- Eliminate some unsecured debt: On the other hand, Chapter 13 bankruptcy still offers filers the chance to discharge some of their unsecured debts, assuming they adhere to the repayment plan for the duration of the case. This might be attractive if you need to eliminate credit card debt or debts from payday loans in order to get back on track with your mortgage.
Ask a Bankruptcy Lawyer about the Advantages of Filing Chapter 13
Chapter 13 bankruptcy is not right for everybody, but if you have a steady income and otherwise are eligible for Chapter 13 protection, you may want to find out more about how Chapter 13 might work for you. To speak with a bankruptcy lawyer today about the advantages of filing Chapter 13 bankruptcy, you can take advantage of this free legal consultation. Simply fill out the case review form below to get started.
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