Most people who are considering bankruptcy turn their attention to Chapter 7. Not only is it faster than Chapter 13, but it also allows you to discharge some or all of your debts, moving you closer to the fresh start you’ve been dreaming of.
However, if you don’t qualify for Chapter 7, it’s time to turn your attention to Chapter 13 bankruptcy. Here are some of the many things it can do for you:
- Save your home from foreclosure: Through a Chapter 13 bankruptcy filing, the automatic stay will stop your lender from proceeding with the foreclosure process. This gives you time to review your situation and decide how to best move forward. Furthermore, you can make up delinquent mortgage payments through your repayment plan, thus allowing you to get back on track.
- Less impact on your credit report: Either type of personal bankruptcy will stain your credit report, but Chapter 13 bankruptcy is less damaging. A Chapter 7 filing remains on your credit report for 10 years, but a Chapter 13 bankruptcy only remains for seven years. It’s still a long time, but you’ll be happy when seven years is up.
- Reschedule secured debts: By rescheduling secured debt, such as a motor vehicle loan, you can catch up on payments as opposed to losing the asset. Also, this may allow you to lower your monthly payments, thus making them more affordable in the future.
Do you have other options?
There’s no denying the fact that filing for Chapter 13 bankruptcy is a big and impactful decision. And even though there are benefits, such as those detailed above, it will impact your life in many ways.
Before you go down this path, you may want to look into other options such as debt consolidation and credit counseling.
Once you’re sure that Chapter 13 bankruptcy is the best way to improve your financial circumstances, turn your attention toward the process itself and what you can do to reduce your stress during this difficult time.
The pros of Chapter 13 bankruptcy outweigh the cons, so don’t hesitate to use this to your advantage.