Falling behind on payments can have drastic results. You are almost never able to come out of the vicious cycle of dues and payments. Bankruptcy can help you come out of grave financial situations. However, it can be quite confusing as there are a number of chapters under which individuals or organizations can file for bankruptcy. It is therefore important to consult a bankruptcy attorney to help you, who can guide which chapter will provide you better options. Bankruptcy lawyers, such as those of Los Angeles based law firm Recovery Law Group can help you understand the difference between Chapter 13 and Chapter 7 bankruptcy.
Advantages of Chapter 7
This type of bankruptcy is known as straight bankruptcy and helps in discharging of any unsecured debts. The benefits include –
- All unsecured debt including credit card bills, utility bills, medical bills or personal loans and any advances on pay-cheques are eliminated.
- You are able to get a faster discharge (between 3-4 months) from the bankruptcy
- You are able to keep your assets as per state exemption laws.
- You can avoid monthly payments as your debts are discharged.
Considering the advantages of Chapter 7 bankruptcy, you can consult a bankruptcy attorney and weigh the pros and cons before filing under it.
Advantages of Chapter 13
In this type of bankruptcy, your debts are consolidated and restructured so that you can make monthly payments over a 3-5 year period.
- All secured and unsecured debt is consolidated.
- You can delay as well as avoid foreclosure.
- Creditor harassment is stopped.
- Co-signers of any debt are protected.
- You get a chance to show your creditors that you can make timely payments.
These monthly payments to bankruptcy trustee go a long way in rebuilding your credit. Any unsecured debts remaining after repayment plan are discharged.
It is important to consult adept bankruptcy lawyers to understand the difference between different bankruptcy chapters as well as finding out the one which is best suited to your situation.