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Many people think that Chapter 7 bankruptcy is better than Chapter 13 because it completely wipes out qualifying debt while the latter requires a repayment plan. However, it’s not that simple.
Each chapter has unique tools that solve specific problems for debtors. If you’d like to save your home from foreclosure, for instance, you’re better off filing for Chapter 13 bankruptcy in Raleigh. If your primary concern is not keeping assets but wiping out insurmountable medical debt, Chapter 7 may be a better option.
Our job here at Weik Law is to help you figure which chapter will bring you the most debt relief that also fits your financial goals. And in some cases, that would be Chapter 13.
When Chapter 13 May Be Better Than Chapter 7
Chapter 7 is an incredible tool, but even if you’re eligible, there are some situations when Chapter 13 bankruptcy might be more beneficial
- You’re Behind on a Mortgage or Car Loan
Chapter 13 bankruptcy allows you to make up the missed payments over time. This will enable you to keep properties like your home or car, which you cannot do under Chapter 7.
- You Have Debt You Can’t Discharge like Domestic Support Arrearages or a Tax Obligation
Bankruptcy will not wipe out these debts. However, Chapter 13’s three to five year repayment plan gives you more time to stay current with your payments. It also gives you more affordable payment terms so you don’t have to struggle as much as you did before filing.
- You Just Need More Time to Repay Your Debts
Some debtors don’t want all of their debts discharged – they just need more time to catch up on payments without fear of losing their home. It can be tough to keep a roof over your head when you have creditors coming after your property and wages.
Chapter 13 bankruptcy in Raleigh is designed to give you breathing room. Thanks to the automatic stay, you’ll have a better chance of doing both under the protection of the bankruptcy court. The automatic stay completely stops all creditor actions while you repay what you owe over 3 to 5 years.
- You Have Nonexempt Property You Want to Keep
Chapter 7 bankruptcy only allows you to keep exempt property protected from creditors under federal or state law. The bankruptcy trustee will take all your nonexempt assets to sell, then distribute the proceeds among your creditors.
In contrast, you don’t have to give up any property under Chapter 13. Instead, you will use your income to repay your debts. However, this doesn’t mean you get to keep more assets than you’re allowed under Chapter 7. All filers can protect the same amount of exempted assets.
The difference? Nonexempt properties can only be sold by the Chapter 7 trustee. Under Chapter 13, you need to pay for the value of the nonexempt property you keep through your repayment plan.
So, if you have nonexempt property you don’t want to give up, Chapter 13 bankruptcy may be the better option. That is, if you can afford to pay for them on top of your other required payments.
Explore Your Options with a Trusted Bankruptcy Lawyer Raleigh, NC
Debt is not a dead-end, and Weik Law Office is committed to helping you achieve the fresh start you deserve. As your bankruptcy lawyer Raleigh NC, expect to be treated with utmost respect and dignity as we help you navigate bankruptcy.
Call Weik Law Office today at 919-845-7877 for a free consultation, and set up a time to speak with one of our friendly professionals.