If you are currently unable to pay your bills on time you may want to consider bankruptcy as an avenue to resolve your debt troubles. In the vast majority of cases, individuals in debt trouble will need to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy. Chapter 7 liquidation involves selling many of your personal assets to quickly dissolve debt. Chapter 13 involves a three-year to five-year court approved debt repayment plan.
Both types of bankruptcy are viable strategies, and one may be more appropriate for you depending on your situation. Here are a few reasons why people choose Chapter 13 bankruptcy over Chapter 7:
You can’t qualify for Chapter 7 proceedings: If your income is over the median state income, and you have enough disposable income to make monthly payments in a repayment plan — that will make a significant enough dent in the debt you owe — you probably will not qualify for the Chapter 7 process.
You want to pay back your debts: From a credit rating perspective, there are many advantages to the Chapter 13 process, as you will be responsibly proving your ability to make monthly payments over a period of time.
You want to stall foreclosure: The Chapter 13 process could allow you to stop the foreclosure process on your home and give you the ability to pay back your missed payments. Also, it will not require you to liquidate your home if its value exceeds the Chapter 7 exemption limitations.
You want to keep your car and other personal assets: If you own a luxury vehicle, significant property and assets, and you’re having trouble paying your bills, Chapter 13 will probably be a better choice if you can qualify for the process — as it will allow you to keep your personal property.
If you answered yes to any of the above questions, Chapter 13 may be the correct bankruptcy option for you. However, before making a decision on the topic, you might want to consult with a qualified bankruptcy attorney in your area.
