5 Major Benefits of Filing for a Chapter 13 Bankruptcy

When your finances are suffering, and you’re having trouble paying your bills, a bankruptcy can provide a much-needed fresh start while you get back on your feet. However, there are many factors to consider before moving ahead with hiring a Chapter 7 of Chapter 13 bankruptcy attorney in Los Angeles for your case, including which type of bankruptcy to file for – Chapter 7 or Chapter 13.

Many people go straight for Chapter 7 because it’s a way to clear all of their eligible debt. However, there are some substantial benefits to choosing Chapter 13 bankruptcy instead, as well. Here’s a closer look at what you need to know to decide whether it’s the right option for you.

1. You can keep your home.

One of the main benefits of going with a Chapter 13 bankruptcy is you won’t lose your home due to your financial situation. This is the case even if you are very far behind in your mortgage payments. In fact, you can keep your home even if a foreclosure complaint means your home is already about to be sold.

2. You can keep your car, too.

In addition to not having to find a new place to live, you won’t lose your means of transportation, either. As with your home, you can retain ownership of your car even if you’re well behind on car payments or the vehicle has been repossessed. If it hasn’t yet been sold at auction, your creditors must return your car to you once you’ve filed for Chapter 13 bankruptcy.

3. You can discharge additional types of debt.

Some types of debts cannot be discharged via any form of bankruptcy – like child support, alimony, and certain kinds of taxes. However, a few can’t be eliminated under Chapter 7 but can with Chapter 13. Examples include money owed as part of a property settlement or divorce agreement. You can also usually avoid paying past penalties or interest on tax debts that aren’t eligible for discharge.

4. You can effectively consolidate your debt.

A Chapter 13 bankruptcy has a lot in common with a debt consolidation plan. Under most circumstances, you don’t have to pay back all of the debts you owe. The portion you will have to pay will be consolidated into just one payment that should be easy and affordable to manage moving forward. You’ll also have a Chapter 13 trustee assigned to your case, which will help you manage ongoing repayment.

5. It’s easier on your credit.

Your credit is going to take a blow no matter which type of bankruptcy you opt for, but the impact is less severe with Chapter 13, as you’re managing your debts instead of merely discharging all of them. It also drops off your report altogether after seven years, while Chapter 7 stays with you for 10.

The right Chapter 13 bankruptcy attorney in Los Angeles can definitively help you determine which type of bankruptcy is the best fit for you, as well as help you navigate the process. There’s light at the end of the tunnel with the right attorney and a well-informed decision on your side.

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