What are the benefits of Chapter 13 bankruptcy?

On Behalf of | Aug 7, 2020 | Chapter 13 Bankruptcy |

Should your finances take a turn for the worse, you must consider every possible strategy for getting back on track. Chapter 13 bankruptcy is one such idea to consider, as it’s packed full of benefits that can provide immediate and long-term relief.

Through Chapter 13 bankruptcy, you have the opportunity to repay some of your debts through a repayment plan. With this, there are times when you can lower your monthly obligation, which improves your ability to stay current.

Some of the top benefits of Chapter 13 bankruptcy include:

  • Prevent foreclosure: Once you file for Chapter 13 bankruptcy, the automatic stay will go into effect. This means that your lender must stop collection proceedings for the time being. Also, you have the ability to catch up on payments through your repayment plan, thus remaining in your home.
  • Less impact on your credit report: A Chapter 7 bankruptcy remains on your credit report for 10 years. However, a Chapter 13 bankruptcy only stays on your report for seven years. It’s only a three-year difference, but that’s a big deal when it comes to bringing stability to your finances.
  • No direct contact with creditors: This is something many people worry about as they consider Chapter 13 bankruptcy. You’re not required to have any direct communication with your creditors. Instead, you’ll make payment plan payments directly to your Chapter 13 trustee. They’re then responsible for distributing these payments to creditors. All you have to do is make one payment each month, which is much easier than the alternative.

While these are among the primary benefits of Chapter 13 bankruptcy, you will find that others move to the forefront as you file and begin to move through the process.

Many people shy away from Chapter 13 bankruptcy as they don’t want to deal with a repayment plan. While that’s a concern, the many benefits of this type of bankruptcy are sure to work in your favor.

If you’re ready to file, review your financial circumstances, learn more about the Chapter 13 bankruptcy process and take every step you can to protect your legal rights.