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Possible benefits of choosing Chapter 13 over Chapter 7

On Behalf of | Dec 12, 2017 | Blog

As similes go, you might say that finances are like ocean tides in that they both have constant ebbs and flows, right? If you think back on your financial history, you likely recall times when you were really on top of your finances and other times when you wondered how to make ends meet. Perhaps there were even times somewhere in between.

Finances almost never stay the same for very long, partly because our circumstances change, often without warning. If a financial crisis hits, you’ll be far more likely to successfully overcome it if you have an idea ahead of time of what your options for doing so might be, should a problem arise. Some options are more viable than others, such as those concerning bankruptcies.

How to choose between Chapter 13 or Chapter 7?

If you determine that you need immediate debt relief to solve your financial problems, you may consider Chapter 7 bankruptcy. However, if complete liquidation of all your assets isn’t what you have in mind, then this particular type of debt relief may not be right for you. Chapter 13, on the other hand, may have possible benefits, such as those listed below:

  • The main difference between Chapter 13 and Chapter 7 is that the former allows you to retain your assets. In fact, it’s commonly known as the wage earner’s plan because you need income coming in to be eligible.
  • Chapter 13 is a restructured payment plan. Creditors in Tennessee or elsewhere can recommend repayment plans that span three- to five-year periods, allowing you to keep working, retain your assets and satisfy your debts.
  • Chapter 13 halts the foreclosure process. What a worry it is to face the threat of foreclosure against your home. This form of debt relief would help you retain ownership of your house.
  • Chapter 13 bankruptcy will only show on your credit report for seven years. If you go with Chapter 7, it will continue to show on your credit history for a full decade.
  • Chapter 13 can also protect any co-signers you have on your loans.

The bottom line is that most financial crises are temporary. A key factor in getting things back on track is to know how to quickly access support that can help you make informed decisions and assess your situation to determine which debt relief route would be the best to take at this time.


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