Filing a bankruptcy is considered to be the last resort for a person or a business firm who is unable to clear his debts. Bankruptcy lawsuit has different options that a person can choose from. The most common options that people prefer choosing are Chapter 7 and Chapter 13. This article will center around the benefits of choosing Chapter 13. It must be noted in this regard that not everyone can apply for Chapter 13 bankruptcy. A person needs to have a proper income of source to avail this option.
Some of the benefits of applying for Chapter 13 bankruptcy are given below:
Asset preservation
Chapter 13 is also referred to as the 'restructuring of debts'. This means that a debtor would not have to part away with his assets like house. Mortgages and car loans can also be restructured so as to let a debtor to keep his personal property that helped him to secure his loan. Unlike in chapter 7 under which all the assets like bank accounts, real estate, stocks, automobiles and jewelry are to be given up, Chapter 13 does not involve such assets seizure. It can be a great relief in the times of financial hardships.
Cosigner relief
Filing for a Chapter 13 provides a debtor the relief from any kind of hassles from the creditors. Since the final repayment decision lies with the court, no debt collecting agency can force a debtor regarding any money-related issues.
Stopping repossession
Owing to the automatic stay option that a person gets after filing for a Chapter 13, any involvement in a house repossession or foreclosure will stop on its own. This is the most important advantage of this bankruptcy option.
Debt repayment plan
Upon filing a Chapter 13, a debtor gets to chalk out a repayment plan and send it out to the court for approval. If it gets approved, creditors need to agree on it.
Reduce payments
This bankruptcy option involves reduction in credit card debt and medical bills. In accordance with a debtor's income, the reduction process takes place.