If the recent economic downturn has put a big dent in your finances, you now may feel like you are drowning in debt. Maybe that rental property you bought three years ago has sat vacant during the last year, which is part of the reason you now are struggling. You may feel financially strapped and are considering bankruptcy. But will you qualify for Chapter 7? What are the advantages of seeking a Chapter 13 bankruptcy instead?
Chapter 13 bankruptcy advantages
If you don’t pass the means test for a Chapter 7 bankruptcy, you can seek a Chapter 13 bankruptcy. Some of the advantages of a Chapter 13 bankruptcy include the following:
- You will receive an automatic stay from harassing creditor calls. Those calls won’t return either because you will set up a payment plan for your debt.
- You may renegotiate how much you owe with creditors for credit card debt, medical debt, past utility bills and personal loans.
- You can avoid foreclosure on your home by restructuring your mortgage and catching up on any late payments during your three-to-five-year payback period.
- You can get rid of tax debts through a Chapter 13 repayment plan.
- You can avoid having your vehicle repossessed by spreading out payments for it over a longer period of time.
- A Chapter 13 bankruptcy only stays on your credit report for seven years. Plus, creditors view a Chapter 13 bankruptcy more favorably because you did pay back your debt.
- You can protect someone who cosigned a loan with you, so creditors can’t pursue a cosigner for delinquent payments on the loan.
Seeking a Chapter 13 bankruptcy
If you are considering filing bankruptcy, you should consult an experienced bankruptcy attorney. An attorney can help you review your options and prepare your bankruptcy filing paperwork.
Sometimes, seeking Chapter 13 bankruptcy protection is the best way to move forward when you are overwhelmed with debt. You can get your debts restructured and pay back what you owe, helping set you up for a stronger financial future.