If you are considering a bankruptcy filing, you will need to know the differences between a Chapter 13 filing and a Chapter 7 filing. There are big differences between these two bankruptcy filings, and your circumstance will determine the proper plan for your future. Now, there are more subtle differences than the intricacies listed here, but let’s take a brief look at a few of the major factors that differ between Chapter 13 and Chapter 7 filings…

Foreclosure May Be Optional

Nobody wants to lose their home to foreclosure. With a Chapter 13 bankruptcy filing, you may be able to avoid foreclosure on your home. After a filing, certain cases may permit individuals to forego foreclosure proceedings spurred on by collectors. Delinquent and overdue mortgage payments can be relieved, and payments may be rescheduled. The same is true for car loans. Car loan payments that have stacked up will be deferred and rescheduled. Clients should maintain payments if they’re able before a Chapter 13 filing is settled.

Chapter 7 bankruptcy filings are less forgiving. If you’re home mortgage is threatened by overdue payments, you’ll lose your home to foreclosure. Additionally, any overdue car loans may cause your car to be repossessed.

Where Your Credit Report Will End Up

Again, Chapter 13 is more forgiving when it comes to your credit score and credit report. Chapter 13 bankruptcy filings only remain on a credit report for seven years, versus a Chapter 7’s ten year record period. Furthermore, a Chapter 13 bankruptcy filing does not hurt a filer’s credit score nearly as much. In both filings, a filer’s credit score will be hindered, but a Chapter 13 filing causes far less injury to a credit report.

What does your credit score do for you? Credit scores are reviewed for vehicle purchasing and financing, loan attaining, and home financing. Having a good credit score gives you more financial independence, and a Chapter 13 bankruptcy filer will have a far better credit report than a Chapter 7 filer.

The Added Benefits of a Chapter 13 Filing

Chapter 13 bankruptcy filers earn the freedom to delay and reschedule overdue payments. This can aid filers in catching up with loans, and loan consolidation can still be an option. If you file a Chapter 13 bankruptcy, you’ll be able to defer your debts, renegotiate them, and possibly lower their required payments.

Furthermore, Chapter 13 bankruptcy filing can protect third-party persons involved in debts incurred. That could aid any co-signers involved in loans associated with the bankruptcy filer. Co-signers will be protected from collectors, and shouldn’t be contacted during the Chapter 13 filing process. Chapter 13 filing also protects filers from collectors for the duration of the filing process.

As always, if you’re further curious about the right bankruptcy option for your current financial stance, you’re always welcome to give Reganyan Law Firm a call. As a bankruptcy specialized firm, Reganyan Law Firm embodies bankruptcy law knowledge; and that means that we’ll work with you to find an appropriate plan for your financial future. Call for a free consultation with our professional bankruptcy lawyer today.