Bankruptcy is usually discussed as if there is only a single option: Chapter 7 liquidation. If you’ve ever seen someone go through Chapter 7, you might be put off by the idea of needing it yourself. You don’t always lose a lot in this form of bankruptcy, but there is a potential that you will have to give up some of your assets.
A better option for some individuals is Chapter 13 bankruptcy. In comparison, Chapter 13 is better for those who earn a decent paycheck but who are struggling with debt. It’s also good for those who earn too much to qualify for Chapter 7 bankruptcy.
With Chapter 13 bankruptcy, you’re in a different position. You’ll make monthly payments to a single party, and that person or entity will pay all creditors who are due from that money. The typical timespan of a Chapter 13 bankruptcy is only 3 to 5 years, and at the end, you’ll have any remaining debts dismissed by the court.
Why choose Chapter 13 bankruptcy?
While Chapter 7 bankruptcy allows you to discharge most of your debts in a short time, it can be very damaging to your credit. Chapter 13 bankruptcy can also be damaging, but you will continue to make payments and control your finances, giving you a better chance of building your credit up during the bankruptcy. Additionally, if you can’t qualify for Chapter 7 bankruptcy, Chapter 13 may be the next best option.
Our web site has more on your bankruptcy options and what they can do for your future.