Negosentro.com | What Benefits You Can Gain From Filing For Chapter 13 Bankruptcy? | If you are way under the debts that have accumulated over the years or months, and there is simply no way you can repay all of them or some of them within a specified period, then you can opt for bankruptcy. What type of bankruptcy you should file depends on your circumstances and considerations.
Chapter 7 bankruptcy is usually filed when you have a low income and you think you will not be able to repay even the small portion of the debts. Chapter 13 bankruptcy is a good option when you can repay a portion of the debts whether small or big. In the former bankruptcy, your valuable assets become liquidated while in the latter, you do not lose any of your assets.
In this article, we will explore all the benefits of filing for chapter 13 bankruptcy to assist you in deciding if is it the right option for you to wipe out your debts.
Benefits of Chapter 17 bankruptcy
When you have debts of such creditors who demand immediate payments and the outstanding balance is overwhelmingly increasing day by day, then Chapter 13 bankruptcy should be your savior during such times of financial ruins. It involves devising a repayment plan under the supervision of a trustee appointed by the court.
The repayment plan gives relaxation to the debtor by increasing the time for loan repayment to 3 to 5 years. When you as a debtor have a regular source of income, filing for this bankruptcy would be a good option for you. The following are some of the many benefits it offers.
- It assists you in preventing your property from foreclosure by giving you an increased time for payment of the past dues.
- Unlike chapter 7 bankruptcy, this bankruptcy lets you keep your property and other valuable assets as there is not liquidation involved. It reorganizes the debt repayment by scheduling a payment plan that allows you to pay back every month instead of lumpsum as demanded by the creditors.
- The repayment plan can also include some unsecured loans such as car loans, which stretch the repayment duration to more months, hence lowering the monthly payments.
- If you have plans of applying for the loan in the next 10 or so years for any big purpose like buying a car or house, you should opt for chapter 13 bankruptcy instead of chapter 7. The reason is that chapter 13 bankruptcy stays on your credit report for seven years while chapter 7 stays for 10 years.
- If you have been a victim of debt collector’s harassment before, you should file for this bankruptcy as it prevents collectors from contacting you directly.
- Chapter 13 also protects third parties and cosigners under one of its provisions.
Even though the benefits of chapter 13 bankruptcy are obvious, its declaration should be done after proper considerations of many financial factors. It affects your credit score and your image, therefore, you should first consult Chapter 13 Bankruptcy Attorney before making a decision.