When preparing to file bankruptcy, you may not realize that you have more than one option.
Many people are familiar with a Chapter 7 bankruptcy, but a Chapter 13 may be a better choice, depending on your circumstances.
Restructure your debts
Filing a Chapter 13 bankruptcy case enables you to create a plan for repaying debts that are not dischargeable. Typically, these are three- to five-year strategies that address some or all of your liabilities.
You can use this option to regain financial control by:
- Addressing past-due mortgage payments
- Preventing foreclosure on your house
- Paying tax debts
- Handling missed car payments
- Retaining non-exempt properties
Get a fresh start
A Chapter 7 stays on your credit report for ten years. At the conclusion of your Chapter 13 plan, you can start anew, free from unsecured debt. This type of bankruptcy appears on your credit report for seven years, but you can begin rebuilding your credit score within the first two years of filing. Also, banks may look favorably on a debt repayment plan as the more responsible choice.
Access flexible terms
It will take a while to pay your debts, but this legal option enables you to:
- Extend the payment timeframe
- Get flexible terms
- Reduce the amount of some liabilities
- Keep properties that you are making payments on
- Stop collection activities
Chapter 13 bankruptcy can manage debts you cannot discharge in a Chapter 7. It enables you to make payment arrangements that help you keep your assets and take control of your finances.