When you compare Chapter 7 bankruptcy and Chapter 13, you might feel that Chapter 7 is more advantageous. The truth is that Chapter 7 is more beneficial in certain situations, but Chapter 13 is better for others. As you compare these options, you will find that Chapter 13 offers three huge advantages over Chapter 7. Here are the three.
1. It Stops You from Losing Your Home
Each branch of bankruptcy helps in specific ways and for certain situations. Chapter 13 is the better choice when a person is on the verge of losing their home to foreclosure. When your bank starts the foreclosure process, you can typically stop the process by paying your past-due balance. If you cannot do this, you will lose your house. You can stop the process, though, by using Chapter 13. Chapter 7 will stop the process for a few months, while Chapter 13 stops it for up to five years. The benefit of this is that you will get up to five years to catch up on it to avoid losing it.
2. It Stops You from Losing Other Assets
The second thing to know about Chapter 13 is that you will not lose any other assets either. Chapter 13 requires a repayment plan that might last for 36 months or 60 months. Because you repay your debts, you do not lose your assets. You can keep the cash you have in the bank, your home, cars, and everything else. You will not risk losing anything when you file for Chapter 13.
3. It Helps with Debts that Chapter 7 Cannot Touch
Finally, Chapter 13 offers the benefit of helping you with all the debts you have. Chapter 7 only helps with qualifying debts, so it excludes other debts. If you have past-due balances on any debt, Chapter 13 will help. When you file, you can create a repayment plan to pay off every debt. Your lawyer works with the bankruptcy court to create this plan, and you must follow it. If you follow it, you will be in much better financial shape when you conclude your plan after three to five years.
If you need help with your finances, you can use one of these branches. You might want to visit a chapter 13 bankruptcy attorney before choosing one, though. Your lawyer can help you pick the right branch for your situation, so contact a law firm today.