Most people facing overwhelming debt want to file for Chapter 7 bankruptcy, due to the fact that it offers an immediate clean slate, but many don't qualify. For this reason, they need to learn more about Chapter 13.
Once you understand the benefits of Chapter 13 bankruptcy, you may soon come to the conclusion that it can help you regain control of your finances.
Here are some of the top benefits:
With the use of a payment plan, you have flexibility with regard to making debt payments. Furthermore, this can help reduce the amount of your payments, thus putting you in a more comfortable financial position.
2. The ability to keep your property
As you make payments under a Chapter 13 repayment plan, you're permitted to keep the property on which you are making payments. This is one of the biggest benefits of Chapter 13, as most people worry that they'll lose some or most of their property when they file for bankruptcy.
3. The opportunity to save your home from foreclosure
If you're facing financial difficulties, there's a good chance you've fallen behind on your mortgage payments. While you may be concerned with losing your home, Chapter 13 can help.
Once you file and the automatic stay goes into place, your lender can no longer move forward with the foreclosure process. This should buy you enough time to get back on track.
From there, since you can make up past due payments through your repayment plan, you will find it possible to prevent foreclosure and stay in your home - as long as you can continue to make your monthly payment as scheduled.
As you learn more about the benefits of Chapter 13 bankruptcy, make sure you also focus on the potential pitfalls. For example:
- Your repayment plan will last anywhere from three to five years.
- Your debt is paid from your disposable income, which means you won't have much "leftover" money each month.
- You will lose your credit cards.
- A Chapter 13 bankruptcy filing will remain on your credit report for as long as 10 years.
Once you compare the pros and cons of Chapter 13, you can decide if this is the right move for you and your money. If it is, don't hesitate to learn more about your rights and how to initiate the filing process.