Although many consumers gravitate toward Chapter 7 bankruptcy as it provides a fresh start within several months, you may come to find that you don't qualify.
In this case, you'll probably want to learn more about Chapter 13 bankruptcy. There are many benefits of this form of bankruptcy, with some of the biggest including:
- Avoid foreclosure: Once you file for Chapter 13 bankruptcy, foreclosure proceedings are stopped, which may buy you enough time to figure things out so that you can stay in your home. Furthermore, Chapter 13 bankruptcy allows you to make up for past mortgage payments.
- Seven years on your credit report: This doesn't sound like a benefit, until you realize that a Chapter 7 bankruptcy remains on your credit report for 10 years. As long as you stay on track with your finances, when this seven year period comes to an end, you'll feel much better about where things stand.
- Reschedule secured debts, often at a lower payment: Since you're able to reschedule secured debts over the life of your repayment plan, it's possible to lower your monthly payment. As a result, you're also improving your financial situation. However, you need to remember that a mortgage for your primary residence can't be rescheduled.
As long as you're willing to learn more and dedicate yourself to the process, don't be surprised if you come to find that filing for Chapter 13 bankruptcy could change your life forever. It all starts with reviewing your situation, understanding the pros and cons and making sure you keep your rights as a consumer in mind every step of the way.
Source: FindLaw, "Benefits of Chapter 13," accessed May 10, 2018