If you are struggling with debts that you see no way out of, you may be considering the possible benefits of bankruptcy. The bankruptcy process subjects the debtor to the rules of the bankruptcy court, which allows for special actions that can benefit them, such as relief from creditor actions and debt discharges.
It is very common for debtors to be confused about which bankruptcy chapter to file with, however. Two of the most common options for individual debtors are Chapter 7 and Chapter 13 bankruptcy. The following are some reasons why filing for Chapter 13 bankruptcy might benefit you.
Chapter 13 bankruptcy could help you keep your home
If you want to avoid losing your home in bankruptcy, it is likely that filing under Chapter 13 will be the best option for you. This is because Chapter 7 bankruptcy requires you to liquidate almost all of your assets. Chapter 13 bankruptcy, however, demands that you restructure your finances so that you are able to repay most of your debts over a longer period of time.
Your credit score will be less impacted under Chapter 13
Having a healthy credit score is important for vehicle financing, credit cars and housing. Filing for bankruptcy will always negatively impact your credit score, but Chapter 13 bankruptcy has less of an impact than Chapter 7. Additionally, Chapter 13 bankruptcy will stay on your credit history for 7 years, while Chapter 7 bankruptcy will only be removed after 10 years.
If you want to live a debt free life, you should be proactive in learning about filing for bankruptcy.