Chapter 13 bankruptcy is something that many people use when they need major relief from their debts. This branch is not the only option, nor is it the best option for everyone. However, it is a good choice in some situations. Here are four good reasons to consider filing for Chapter 13 bankruptcy.
1. You Need Debt Relief but Do Not Qualify for Chapter 7
The first reason to choose Chapter 13 is when you need debt relief but do not qualify for Chapter 7. Chapter 7 is a great branch of bankruptcy, but it is not an option for everyone. You cannot use it unless you meet the guidelines and criteria for it. One of the guidelines is an income test, which requires that you earn less money than the state average. A bankruptcy attorney can tell you if you qualify for Chapter 7, Chapter 13, or both.
2. You Want To Stop a Foreclosure
The second good reason to file for Chapter 13 is to stop a foreclosure from occurring. If you are on the verge of losing your home to your lender, filing for Chapter 13 will stop it from taking place. Chapter 13 is one option you can choose to stop a foreclosure.
3. You Have an Underwater Mortgage
The next reason to use Chapter 13 is to eliminate the issues that come with an underwater mortgage. When you have an underwater mortgage, you owe more money than your home is worth. Through Chapter 13, you might be able to eliminate a second or third mortgage loan tied to the house if you owe more than it is worth.
4. You Owe Debts that Cannot Be Discharged
Finally, when you owe money on debts that Chapter 7 will not discharge, using Chapter 13 can be a great answer. Chapter 13 lets you repay your debts through a repayment plan over time. The timeframe is usually three or five years, and you can include any debts you have. If you have debts that would not be discharged in a Chapter 7 case, filing for Chapter 7 would not offer the relief you need. Filing for Chapter 13 will, though, and you may want to consider filing for this reason.
If your financial situation involves any of these circumstances, you might want to consider using Chapter 13. If you have questions about it, talk to a bankruptcy law firm, such as Ozment Law PA, that offers Chapter 13 services.