Reasons To Choose Chapter 13 Bankruptcy Even If You Qualify For Chapter 7

If you do not qualify for Chapter 7, your attorney might suggest using Chapter 13 bankruptcy if you need help with your debt. People also choose Chapter 13 for its benefits, even when they are eligible to use Chapter 7. What are the benefits of Chapter 13? If you can qualify for both branches, why choose Chapter 13? If you are interested in learning these answers, continue reading to find out the top reasons people use this branch.

Most of Your Debt Is Not Qualifying

One of the first things a bankruptcy attorney does when meeting with a client is separate their debts. Attorneys separate debt into two categories — qualifying debt and non-qualifying debt. When debt qualifies, it means that you can receive a discharge on it through Chapter 7 bankruptcy. When it does not qualify, you cannot receive a discharge. People tend to prefer Chapter 7 more when most of their debt is qualifying. If you have more non-qualifying debt, though, using Chapter 13 might be the better option.

You Own a Home and Might Lose It

The second reason to consider Chapter 13 is if you own a home and risk losing it. You could risk losing it if you have a lot of equity in it when you file a Chapter 7 case. Trustees can seize homes when people use Chapter 7, but they only do this when there is a lot of equity present. The second way you might lose your house is through foreclosure. If you are on the brink of foreclosure, filing for Chapter 7 will not offer relief. You cannot stop the foreclosure through this branch. You can stop it by filing Chapter 13. As a result, many people file Chapter 13 to stop a foreclosure from occurring.

You Have Other Valuable Assets

The other reason to turn to Chapter 13 is to avoid losing other assets. If you own a lot of things or have money in the bank, you risk losing these things through Chapter 7. You cannot lose your assets in Chapter 13 because you agree to repay your debt. If you repay your debt, they cannot seize your things. If you file a Chapter 7 case when owning a lot of assets, the court can take these things.

If you have questions about your situation, talk to a Chapter 13 bankruptcy lawyer for legal advice and tips before you decide what to do.

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An End to Debt

When you are over your head with no way out, declaring bankruptcy can be the best choice for your own financial future. Depending on the type of bankruptcy that you declare, this can either mean that your debts are erased, or that they are consolidated and reduced so that you are better able to pay them. Navigating bankruptcy is not easy, and most people cannot do so without the aid of a good bankruptcy attorney. But even before you hire that attorney, you could probably use some basic advice and guidance. That's where this website comes in. We are not lawyers, but we have a lot of helpful advice to offer when it comes to bankruptcy and bankruptcy law.

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