When you have found yourself in a situation where your debts have overwhelmed your income, you might be thinking about filing for bankruptcy. While you have a couple of options for the type of bankruptcy you might file, you may find that Chapter 13 is a potential choice. Here's a look at some of the advantages of choosing Chapter 13 for your bankruptcy filing.

Restructures Your Debts Instead Of Defaulting Them

When you file for Chapter 7 bankruptcy, some of your assets will be sold to help pay down your debts, then the remaining balances are written off as part of the bankruptcy process. When lenders see a Chapter 7 bankruptcy on your credit, it shows them that you didn't settle that debt in full. 

Chapter 13, on the other hand, doesn't eliminate your debts. Instead, it allows you to repay them in a way that works for you. The full debt is repaid, though it may take you longer to do so. When a potential lender sees Chapter 13, it reflects better than Chapter 7 because it shows the good faith of repaying those debts in full instead of writing off the balance that you couldn't settle.

You Can Make Your Payments More Manageable

Chapter 13 restructures your debts into more manageable payments. In some cases, it stretches the balance out over a longer period of time, while in other cases you find that your lenders are more flexible about your payment amounts and balance due. 

This type of bankruptcy shows future prospective lenders that you took the steps necessary to ensure repayment of your obligations. It is a more responsible approach that will help you manage your debts more easily while still making good on those commitments.

Chapter 13 Has Fewer Restrictions

When you file for Chapter 7, you're required to liquidate certain types of assets as part of the agreement. Since Chapter 13 doesn't eliminate balances, you have more flexibility in the assets that you get to keep when the process is all said and done. Additionally, you can file for Chapter 13 more frequently than you can file Chapter 7. This gives you some flexibility if you find yourself overwhelmed and in need of more financial support.

These are a few of the many reasons why Chapter 13 bankruptcy is a great option when you need it. Contact a Chapter 13 bankruptcy lawyer for more information. 

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