Many people would rather file Chapter 7 bankruptcy than Chapter 13, but did you know that Chapter 13 has a lot of benefits? If you don't know a lot about these branches of bankruptcy and their differences, you might not realize the advantages that Chapter 13 offers. Here are some of the top ones you should know about if you are considering either type.
Chapter 13 Provides Relief for People Who Don't Qualify for Chapter 7
First, many people do not meet the eligibility requirements for Chapter 7. People in this group may decide to look for a different strategy for debt-relief purposes, and one option they can consider is Chapter 13. A wide range of people can meet the eligibility requirements for Chapter 13. Therefore, the first benefit is that you can use this plan if you cannot use Chapter 7.
Chapter 13 Protects Your Assets
One vast difference between Chapter 7 and Chapter 13 is the effects the plans have on your assets. With Chapter 7, you receive forgiveness of debts in exchange for giving up your assets. In other words, using Chapter 7 poses risks to valuable things you own. You do not have this risk with Chapter 13. This branch allows you to keep the things you own. You won't have to turn them in to the court, and you won't have to worry about this risk. If you don't want to lose your items, Chapter 13 is the way to go.
Chapter 13 Offers Relief for All Debts
Chapter 7 has limits on the debts it provides relief for in a plan. When using Chapter 7, you can only experience relief for qualifying debts, such as medical bills and credit cards. While this branch will eliminate those types of debts, it does not assist with other debts.
Suppose you have a past-due balance on your mortgage and need aid to pay it. Unfortunately, Chapter 7 will not help. Perhaps you owe a lot of back taxes or child support. If this is the case, you will not find relief from Chapter 7. Chapter 13, though, provides relief for all debts, including the typical qualifying debts and the types that do not qualify for relief through a Chapter 7 plan.
If you are not sure if you want to file for bankruptcy, talk to a lawyer. A bankruptcy lawyer can help you make this decision and assist you with your entire plan. Contact bankruptcy attorney services in your area for guidance.