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Chapter 13 offers many advantages over Chapter 7

Any time you consider a bankruptcy, it is often difficult to remain objective and keep a clear head about the process. Not only is bankruptcy a complicated process, those who use it must submit to financial restrictions for a number of years, and must often forfeit many of their possessions along the way.

However, for those who have significant income and simply need some assistance paying off their debts in a structured manner, Chapter 13 may offer needed relief without imposing all of the harsh restrictions that the public generally associates with bankruptcy. In most cases, when the public refers to bankruptcy, they are really thinking about Chapter 7, which is both the most widely available and also the form that requires the greatest sacrifices from the debtor.

If you believe that you may benefit from Chapter 13, it is wise to look carefully at your circumstances and income to determine if you qualify. Should you qualify, Chapter 13 is usually preferable to Chapter 7, because it requires less forfeiture of property, among other things.

Making up for missed mortgage payments

One of the most useful and sought-after benefits of Chapter 13 is that it allows debtors to pay back mortgage payments that they missed while avoiding foreclosure. Unlike Chapter 7, which offers a debtor relief in exchange for forfeiting property, Chapter 13 stalls collection efforts and even discharges some debts if the debtor follows the repayment plan approved by the court.

It is important to note that while the debtor may make up missed payments through a Chapter 13 repayment plan, he or she must still make ongoing payments on the mortgage on time throughout the course of the bankruptcy, or else derail the bankruptcy itself.

Credit reports and Chapter 13

If the debtor follows the Chapter 13 repayment plan through to the end, he or she receives the benefits of the bankruptcy, but must also accept the damage that it does to his or her credit score. However, Chapter 13 is kinder in this regard as well, because it is only visible on a credit report for seven years, whereas a Chapter 7 remains on a credit report for 10 years.

Protecting your rights and future

If you qualify for Chapter 13, the sooner that you begin the process the better. You can carefully look at all the requirements and timetables of the bankruptcy and seek out professional guidance if you feel that you need it, to ensure that you receive all the benefits of the process and remain on track to make a full financial recovery.

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