When filing for bankruptcy, you will need to choose whether you are filing a Chapter 7 or a Chapter 13 bankruptcy. With a Chapter 7 bankruptcy, your assets are liquidated to repay your debtors, and you can walk away from your unsecured debt. With a Chapter 13, you retain your assets and make a monthly payment to pay your creditors what you owe them. For those who are eligible for a Chapter 7 bankruptcy, walking away from your unsecured debts might seem enticing. However, there are many advantages to a Chapter 13 bankruptcy instead. Even though filing under Chapter 13 means paying your creditors each month, the advantages of this option over a Chapter 7 can help your new start stay inline with your original financial goals.
Here are some advantages to a Chapter 13 Bankruptcy:
- With the Chapter 13 option, you will not have to relinquish your personal assets. Even with mountains of debt, and daily calls from creditors, you will be able to retain your property because you have made arrangements through your bankruptcy settlement to pay the money owed on your assets.
- A Chapter 13 bankruptcy will stop the harassing phone calls you have been receiving. That alone might make you want to declare bankruptcy today! Once you have filed under Chapter 13, an automatic stay is declared which halts repossessions, garnishments, and foreclosures so that you keep your personal property as long as you meet the bankruptcy requirements.
- Some of your debt can actually be reduced under a Chapter 13 bankruptcy. If you have incurred multiple late fees on your credit card bills, additional finance charges on loans, or other penalties that arose from your original commitment, these can be negotiated under a Chapter 13 settlement.
- Chapter 13 bankruptcy encompasses all of your debt. Therefore, your secured loans, student loans, alimony and other debts that might not be given consideration under a Chapter 7 filing will be under your rearranged payment plans with your Chapter 13 ruling.
Making a monthly payment is a Chapter 13 deterrent for some people when they are considering bankruptcy options. There are several advantages to reorganizing your personal financial structure and repaying your creditors under the chapter 13 guidelines. With a Chapter 13 with or without the help of an attorney, you can get your life back on the path you were on before, instead of starting your financial status and your list of assets from scratch.
- This was a guest post by the Westbrook Law Group.