If you have recently lost a main source of income due to unemployment, injury, or a medical condition or you have become overwhelmed by debt and expenses, filing chapter 13 bankruptcy may be right for you. Chapter 7 liquidates your debts, which is extremely helpful for most people, but not everyone will qualify for this form of bankruptcy. Thankfully, there is an alternative. Here are a few benefits of filing chapter 13.
Shorter Effect on Credit
Filing bankruptcy will negatively affect your credit. When filing chapter 7 to liquidate your debts, the bankruptcy will remain on your credit report for up to 10 years.
Since you will be making payments on your debt after filing chapter 13, the bankruptcy will affect your credit report for around seven years. The impact on your credit report and overall credit score will be less when filing chapter 13.
You may have an enormous amount of debt, which can include credit cards, loans, and medical bills in addition to a house. In most cases, chapter 7 will liquidate these debts, but it will not stop a foreclosure from happening if you are behind on your mortgage payments.
Filing chapter 13 bankruptcy will help you avoid foreclosure, allowing you to keep your home because you will continue making monthly mortgage payments through a debt restructuring program.
By paying off your debt with more affordable payments, you will be able to catch up on late and missing mortgage payments, allowing you to remain in your home without fear or worry.
Lower Payments/Less Stress
Financial worries cause stress and anxiety disorders and depression. While shocking for many to learn, severe financial struggles can even develop into thoughts and attempts at suicide. Easing this emotional distress is possible through bankruptcy.
The restructuring of debts that occurs in chapter 13 reduces your monthly payments and total payoffs, which also benefits your physical and emotional well-being.
Making small monthly payments to pay off smaller balances through the debt restructuring program of chapter 13 will ease the financial burden that affects your mood and stress or anxiety level.
Lastly, the ability to make one payment to a bankruptcy trustee is also helpful for easing the stress of paying multiple creditors month-to-month.
Filing bankruptcy is not for everyone, but an attorney can help you determine if it is right for you and your finances. To learn more about chapter 13 bankruptcy in the Plano, TX area, contact Collins & Arnove today at 972-516-4255.
Collins & Arnove | Chapter 13 Bankruptcy Plano TX | 972-516-4255