Filing bankruptcy is something that people rarely wants to do because it can have a significant impact on your credit rating. But, sometimes it is the best option for protecting your long-term financial status. Chapter 7 and Chapter 13 are the most common forms of individual bankruptcy protection, but there are specific differences between the chapters. Chapter 7 is effectively for individuals with very little assets who want to discharge as much debt as possible while keeping as much property as possible. Chapter 13 is a qualified bankruptcy protection that is usually available to individuals or married couples who want to refinance their debt while keeping as much of their property as possible.
Advantages of a Chapter 13 Filing
Filing Chapter 13 bankruptcy is the best option for many filers, especially those with a good steady income. The possibility that creditors will be willing to refinance debt for a Chapter 13 filer is also much better than Chapter 7 when your track record with that particular creditor has been good in the past. Lending agencies understand that calamities happen through no fault of the client and will often work with them to restructure the outstanding debt, and all lending agencies really want is a return on their investment in your loan. Outstanding restructured debt in a Chapter 13 bankruptcy can often be recovered through the three to five year restructuring plan that is crafted by your trustee to fit your personal anticipated budget.
Protecting Your Assets
Most filers enter into bankruptcy with the specific intention of protecting their home, and in some cases other real estate. In fact, many times all of your financial liabilities can be lumped into one payment and leave more ample expendable income for other family needs. Some people find themselves actually saving money when they restructure because there are also some liabilities like credit card debt that can be discharged in the Chapter 13 process. When you can qualify for Chapter 13 the outcome is often very positive.
Filing bankruptcy is still a serious financial decision for any person contemplating the legal move to protect your assets and get a grip on your personal budget. Having an experienced bankruptcy attorney who can help with making sure that all issues are addressed while building a repayment plan can ensure that the plan is workable while you work to get your life back on solid financial ground.