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Benefits of Filing For Chapter 13

Benefits of Filing For Chapter 13
"""Filing for bankruptcy is never a simple decision. However, for many individuals suffering from overwhelming debt, it can be a fantastic way to start over. Knowing which bankruptcy case to file is one of the most essential aspects of declaring bankruptcy. Whenever feasible, debtors are advised to file for Chapter 13 bankruptcy rather than Chapter 7.

Debts

One of the greatest advantages of a Chapter 13 bankruptcy over a Chapter 7 bankruptcy is the ability to manage multiple categories of debt simultaneously. Chapter 7 bankruptcies are typically limited to eliminating unsecured obligations. In a Chapter 13 bankruptcy, secured debts can be readily managed without some of the risks they would face in a Chapter 7 case.

Similarly, some debts generally do not qualify for bankruptcy, and when they do, they can only be discharged under Chapter 13. For instance, domestic support payments, tax debts, and student loan debts are ineligible for discharge unless they are included in the Chapter 13 repayment plan. The majority of debtors find that consolidating their debts into a single monthly payment is much simpler to manage and accomplish than other debt relief options.

Assets

Most individuals worry about losing their assets in bankruptcy. However, filing for Chapter 13 can completely eradicate this risk. This is crucial for secured debts such as a mortgage or vehicle loan. A Chapter 7 debtor is more likely to lose these assets through repossession or foreclosure than a Chapter 13 debtor. Since payments will be made towards secured debt in a Chapter 13 case, creditors must adhere to the repayment plan and cannot seize or sell the asset.

Credit

It is not uncommon for debtors to discover that their credit has improved after registering for bankruptcy. However, obtaining credit in the future can be more difficult after a Chapter 7 filing. Simply because there is no repayment of debts in Chapter 7, creditors' accounts are fundamentally considered """"resolved"""" or """"settled"""" rather than """"satisfied"""" as in Chapter 13. The majority of future creditors will be more receptive to lending to a borrower who effectively exited Chapter 13 than Chapter 7. That is not to say that post-Chapter 7 debtors will never receive credit again; rather, it will be more difficult and require more work to establish a new credit rating.

" - https://www.affordablecebu.com/
 

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"Benefits of Filing For Chapter 13" was written by Mary under the Finance / Wealth category. It has been read 139 times and generated 0 comments. The article was created on and updated on 01 June 2023.
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