If all you did was take a passing glance, you might start to think that Chapter 7 bankruptcy is more beneficial for the average person in Louisiana then Chapter 13 bankruptcy.
Chapter 7 bankruptcy involves the immediate discharge of unsecured debts if the courts approve your filing, while Chapter 13 bankruptcy typically requires that you continue to pay back your creditors for at least three years before discharge.
However, the speed with which you discharge your debts and whether you have to make payments are only two considerations that should influence your decision-making about bankruptcy. There are many benefits to Chapter 13 proceedings that make it a worthwhile consideration for those struggling with debt.
Chapter 13 can help you catch up on your mortgage
Part of Chapter 13 proceedings involves the renegotiation of the terms of certain debts. You can stop foreclosure and cure defaults in mortgage payments over time.
Chapter 13 proceedings protect your assets
One of the issues with Chapter 7 bankruptcy is that the courts limit the amount of income you can have as well as the value of the possessions you can retain without liquidating them to repay creditors.
People who file for Chapter 7 bankruptcy may have some of their assets sold by the bankruptcy trustee. When you file for Chapter 13 bankruptcy, there is no requirement for you to liquidate any of your assets.
Chapter 13 bankruptcy only shows up on your credit report for seven years
Any credit you receive, whether it's a credit card you paid on time or a delinquent account, will stay on your credit report for seven years. The same is true for Chapter 13 bankruptcy.
You only have to worry about it affecting your credit score for seven years after your discharge. Those who receive a Chapter 7 discharge will have the bankruptcy on their credit report for 10 years.
You can file again more quickly if you wind up back in debt
In order to prevent people from abusing the bankruptcy system, there are important legal limits in place regarding how often people can file bankruptcy. You have to wait eight years after filing for Chapter 7 bankruptcy before you can file again. However, those who use Chapter 13 bankruptcy can refile as frequently as every two years if they still find themselves struggling financially.
If you aren't certain which form of bankruptcy is best for you and your situation, talking about it with an experienced Louisiana bankruptcy attorney can help you make a more informed decision.