When considering bankruptcy, many people turn their immediate attention to Chapter 7. They do so for many reasons, including the ability to eliminate their debt in a timely manner (typically within six months).
While Chapter 7 may be your preference, there's a chance you won't qualify. Fortunately, there's another option: Chapter 13 bankruptcy.
There are many key advantages of Chapter 13 bankruptcy, including the following:
- Stop foreclosure: For many people, this is the top benefit of a Chapter 13 bankruptcy filing. Not only do you stop the foreclosure process, but you're also in a position to make up delinquent mortgage payments to ensure that you can remain in your home.
- Less impact on your credit: A Chapter 7 bankruptcy remains on your credit report for 10 years. A Chapter 13 bankruptcy, however, only remains on your credit report for seven years. This makes a big difference when it comes to getting your financial life back on track.
- Lower your monthly payments: In Chapter 13 bankruptcy, you'll reschedule secured debts over the course of your repayment plan. This often leads to lower monthly payments that are easier to keep up with.
Despite the temptation to immediately focus on Chapter 7 bankruptcy, you shouldn't overlook what Chapter 13 can do for you. With a variety of benefits and advantages, this may be the perfect way to regain your financial footing.
If you're interested in proceeding, compare the pros and cons of Chapter 7 and Chapter 13 bankruptcy. When you combine this with knowledge of the process and your legal rights, you can decide which steps to take next.