No one wants to file for bankruptcy, but it’s nice to know the option is available to you should your finances take a turn for the worse.
If you find yourself in this position, it’s important to learn more about every type of bankruptcy, including Chapter 13.
While Chapter 7 is preferred by many, thanks to the fast and fresh start, there are many reasons to consider Chapter 13. Here are some to keep in mind:
- Avoid the foreclosure process: If you’ve received a notice of foreclosure from your lender, the best thing you can do is take steps to stop it. A Chapter 13 bankruptcy filing allows you to do just that. Once you file, the automatic stay will bring the process to a halt. And if everything works out, you can then make up back payments through your repayment plan.
- Less impact on your credit report: When you file for Chapter 7 bankruptcy, it will remain on your credit report for 10 years. But when you file for Chapter 13 bankruptcy, it will only remain for seven years. Yes, that’s still a long time, but it’s three years shorter than Chapter 7, which means you can put it in the past that much sooner.
- Lower payments in the future: Chapter 13 bankruptcy allows you to reschedule secured debts. When doing so, you can extend them over the life of your repayment plan, which typically lasts three to five years. This can result in lower monthly payments, thus allowing you to stay on budget in the future.
If you’ve tried everything to repair your finances but continue to come up short, open your mind to Chapter 13 bankruptcy. As you learn more about the benefits, you can decide if these are able to improve your situation.
Should you decide in favor of Chapter 13 bankruptcy, learn more about the process, the potential drawbacks and the steps you can take to protect your legal rights and property.
It’s a big decision to file for Chapter 13 bankruptcy, but if it’s the right one you’ll soon find it paying off in a number of ways.