You might think that the decision to choose Chapter 7 bankruptcy over Chapter 13 is obvious. After all, wouldn't it be better to resolve all of your debts quickly, simply by selling off some of your assets, as opposed to the long, drawn out debt payoff process associated with Chapter 13?
This is not necessarily the case. Particularly if you own a business, luxury items or a home that you don't want to risk selling off, Chapter 13 could be a great option to set up affordable, monthly payments that -- once you've made them on time over a three to five year period -- will serve to resolve any remaining debts covered by the bankruptcy.
Looking more closely at the benefits of Chapter 13
There are three important benefits to Chapter 13 that those who are having debt problems may want to consider:
- The organization of your Chapter 13 payoff plan will be flexible. Borrowers will have a great deal of leeway when setting up a Chapter 13 payoff plan that works for them. That means you'll have some wiggle room in terms of how small and affordable you want your payments to be and how long your payoff plan will last. The process may be much more affordable than you think.
- Having a Chapter 13 bankruptcy on your record will affect your credit report, but it might not affect your credit report as badly as Chapter 7. It certainly will look a great deal better than having missed credit card payments and repeated late payments.
- You can file for Chapter 13 bankruptcy more often than you can file for Chapter 7. Let's say you get into a debt problem again after completing your Chapter 13 process, you will have the ability to file for another Chapter 13 much sooner than you'll have the ability to file for another Chapter 7.
Are you ready to consider your debt resolution options?
There are benefits to both Chapter 7, Chapter 13 and other non-bankruptcy debt resolution solutions. Be sure to understand the pros and cons of all the pathways available to you before you move forward with your debt resolution plans.