your options for getting out from under debt

When Is Chapter 13 Bankruptcy Better Than Chapter 7?

If you cannot see light at the end of the tunnel when it comes to the debt you have, you could turn to bankruptcy for help. When you do this, a lawyer will help you determine which branch you qualify for and which branch would be better for you. In many cases, people will qualify for Chapter 7 but will be better off filing for Chapter 13, and here are several reasons why.

Chapter 13 Helps You Repay Debts

If you qualify for Chapter7, filing for bankruptcy would eliminate most of the unsecured debts you have, such as medical bills, but it would not offer any type of relief for debts that do not qualify for discharge. Examples of debts that would not qualify for a discharge include tax debts (in most cases), child support, and student loan debt.

When a person owes money for debts that do not qualify for discharge, filing for Chapter 7 will offer no relief for these debts, but filing for Chapter 13 will. Through Chapter 13, you can repay any debts you owe through a repayment plan that lasts for up to five years. Chapter 13, therefore, offers a way for you to catch up on all of your debts, not just unsecured debts.

Chapter 13 Stops Foreclosures and Repossessions

Secondly, when a person is facing a repossession of their car or a foreclosure on their house, filing for Chapter 7 will provide no relief at all. While filing for Chapter 7 may bide a person a little more time, the creditors will have the right to pursue repossession or foreclosure as soon as the court discharges the case.

Because Chapter 13 offers and requires a repayment plan, it provides a way to stop a repossession or foreclosure from taking place. Once a person files, it gives the person up to five years to pay off past-due amounts on these assets, and it offers a payment plan the person can afford. If you are facing either of these two things, using Chapter 13 will be the best choice for your situation.

Chapter 13 Lets You Keep Your Assets

Finally, through Chapter 13, you will not risk losing things you own. In Chapter 7, the court can seize things that you own, if they have equity in them.

If you want to gain control of your finances and not lose any of the assets you own, you may want to consider filing for Chapter 13 instead of Chapter 7. Contact a bankruptcy lawyer to learn more about this.