If you’re overwhelmed with debt, you may be considering filing for bankruptcy. The first step you must take is to decide whether you’re filing filing for Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy discharges all of your unsecured debts, while Chapter 13 requires you to pay back all or part of your debts. Although filing for Chapter 7 bankruptcy does have its downsides, it still has some distinct advantages over Chapter 13 bankruptcy.
You’ll Get a Financial Fresh Start
Because Chapter 7 eliminates all of your unsecured debts, you have the opportunity for a financial fresh start. Without those debts dragging you down, you will be able to put away more money and start saving for your future. However, be aware that you won’t be able to discharge secured debts, like student loans, alimony, or taxes.
You Won’t Have a Repayment Plan
With Chapter 13 bankruptcy, you still have to pay back your debts. Although the interest rates may be lower than before, it can still be a struggle to repay the debts. If you file for Chapter 7, you won’t have to worry about paying back your debts.
It’s a Quick Process
When you’re going through a legal process like bankruptcy, you want to get it over with as quickly as possible. Luckily, Chapter 7 bankruptcy can discharge your debts in as little as three months. Then, you can get on with your life. Chapter 13 bankruptcy, on the other hand, typically takes at least several months.
There’s No Limitations on the Amount of Debt
One of the disadvantages of Chapter 13 bankruptcy is that it puts a limit on the amount of debt you can have. If you exceed that limit, you won’t qualify. That’s another reason why Chapter 7 bankruptcy is a good choice for many people in debt. It doesn’t impose a limit on the amount of debt you can have.
You Can Keep Your House
Many people are under the misconception that they will automatically lose their home if they file for Chapter 7 bankruptcy. However, as long as you stay current with your mortgage payments after you file for bankruptcy, you can keep your home.
Consulting With a Bankruptcy Lawyer
If you think Chapter 7 bankruptcy is the right choice for you, speak to a qualified bankruptcy lawyer, like a chapter 7 bankruptcy lawyer in Bloomington, IL, as soon as possible. Bankruptcy is a complex legal process and you don’t want to go through it alone. A bankruptcy lawyer can help you file the paperwork in a timely manner and advise you through the entire process. When you have a qualified professional on your side, you will have peace of mind.
Thanks to Pioletti Pioletti & Nichols for their insight into the advantages of Chapter 7 over Chapter 13 bankruptcy.