When a Tennessee resident is struggling financially, personal bankruptcy is a viable option to get on stronger financial ground. However, there is often confusion as to which type of bankruptcy is the wisest choice. For most consumers, the choice is between Chapter 7 and Chapter 13. Since Chapter 7 is a liquidation bankruptcy, it is better for people who do not have significant property and assets that they want to retain. For people who own a home or have other assets they want to keep, Chapter 13 is likely better. Understanding the benefits of Chapter 13 is vital when deciding which option to use.
People filing for Chapter 13 instead of Chapter 7 have the ability to keep their home. Chapter 13 stops foreclosure and allows the filer to clear any delinquent payments on their mortgage as time passes. It is critical that the filer continue making the mortgage payments when they are due while the Chapter 13 plan is in place. With Chapter 13, the filer can also reschedule any secured debts separate from a mortgage for a primary residence. It can be extended for the duration of the Chapter 13 plan, which can reduce the payments.
Chapter 13 is comparable to a consolidation loan in which the payments will be made to the trustee of the case and then distributed by the trustee to creditors. There will be no contact between the debtor and the creditors, so harassment or pressure from the creditors will no longer be an issue.
Chapter 13 is a way for debtors to come to a reasonable payment plan and get a grip on their debts while keeping their home. A law firm that has experience in Chapter 13 cases and other personal bankruptcy choices can help.