Even in times of overwhelming financial hardships, most people want to avoid filing bankruptcy. For many, this is the last resort to consider and only after every other resolution fails.
Wanting to pay your debts is admirable, but it also makes sense to explore all your debt relief options in full. Discounting a bankruptcy because you fear it reflects badly upon you could be a mistake. In fact, our bankruptcy attorney often tells clients that bankruptcy is a reset button. In most cases, ruling out bankruptcy comes with the risk of worsening your financial situation.
Here’s how a Chapter 13 bankruptcy may be able to help you
Once you have decided to consider bankruptcy, you must choose between Chapter 7 and Chapter 13. Those that still have a reliable income often choose to file a Chapter 13 bankruptcy. Some of the benefits of this choice include:
- Continued responsibility. You can still own your debt and continue making reasonable payments with a repayment plan. That can make you feel better about having to take this step.
- Halts foreclosure. A Chapter 13 bankruptcy halts foreclosure proceedings immediately and may allow you to catch up on overdue mortgage payments. If you’re successful, this may allow you to keep your home.
- Reduced credit score impact. With Chapter 13, the bankruptcy only remains on your credit reports for seven years, instead of the 10 years with Chapter 7.
- Co-signer protections. If someone co-signed a loan on your behalf, a Chapter 13 bankruptcy could also protect your co-signer from legal action.
Bankruptcy requires careful consideration before you make any decisions. Learning as much as possible about all your options can help you determine which bankruptcy will meet your needs. Contact our office to set up a consultation with our knowledgeable bankruptcy attorney about your options.