Advantages of a Chapter 13 Bankruptcy
Many people feel that Chapter 7 bankruptcy has more advantages since it is known to give consumers a fresh start by discharging outstanding debt whereas a Chapter 13 bankruptcy allows you to reorganize your debt with a repayment structure over a three to five year period. But what some people don't realize is that Chapter 13 has advantages that may work for you under the right circumstances.
A significant advantage to Chapter 13 is that it includes letting debtors keep their home if they are behind on payments and are facing foreclosure . Chapter 13 helps homeowners cure missed mortgage payments, seek loan modification options and have a lien removed on second and third mortgages. The curing of the mortgage is paid during the period of the repayment plan set during the Chapter 13 filing.
Another advantage includes reducing vehicle payments. With a qualifying vehicle, the principal loan amount along with the interest rate can be reduced. This means monthly payments could be lowered and more affordable during the repayment plan period set during the filing.
If you have a co-signor or co-debtor listed on an account, as long as you continue to make on time payments, they are protected from harassment of debt collectors and creditors while the repayment plan through bankruptcy is in effect. Some people see Chapter 13 as a consolidation loan but with a court order. You don't have to worry about being in direct contact with your creditors or collectors but they will be required to accept what payment is set.
Another advantage is that while Chapter 7 can be filed once every eight years, you have the option to file Chapter 13 more often. It's also possible to discharge certain debts in Chapter 13 that are non-dischargeable in Chapter 7. Questions and concerns should be discussed with an experienced bankruptcy attorney.