Chapter 13 bankruptcy comes with some benefits that are not afforded in a Chapter 7 case, though Chapter 13 does require that you continue to pay some of your debts to take advantage of those benefits. Essentially, Chapter 13 bankruptcies help you reorganize debts so that you can begin a more affordable lifestyle.
Reorganization of debts does include discharging some debts, but you might also affirm other debts. Reaffirming debts lets you keep items such as cars or homes. You might refinance those items or work with creditors on payment solutions.
In addition to keeping some assets, Chapter 13 bankruptcy lets you stop creditor harassment. In most cases, creditors have to stop action as soon as your petition is filed with the court. In addition to phone calls and other collections contact, creditors also have to stop wage garnishment. Lenders cannot repossess vehicles during the bankruptcy proceedings and home foreclosures are also stopped. This doesn’t mean you won’t end up giving up homes or cars during the proceeding, but a Chapter 13 bankruptcy does let you make more of the decisions regarding such things.
Other benefits of Chapter 13 bankruptcies include gaining debt relief that could be critical to your financial situation and gaining time to may repayments on your debts. Chapter 13 bankruptcy is not evidence of your failure. It is, instead, a tool that can be leveraged during times when financial situations have gotten out of hand for various reasons. Some reasons bankruptcy might be necessary includes large and unplanned medical debts, a change in income or loss of job, or any other sudden change in income or expenses.