For Tennessee consumers, filing for bankruptcy is a difficult decision. But for those drowning in debt, it’s the only option for relief. After making the choice to file, the next question is: Chapter 7 or Chapter 13? Both offer many benefits, but they do have disadvantages as well. Learn more about Chapter 13 bankruptcy and why it’s a good choice for many consumers struggling with credit card debt.
Chapter 13 bankruptcy allows consumers to make manageable payments on their debts. They are given up to five years with flexible terms, while a Chapter 7 bankruptcy is completed in a matter of months. All bankruptcies go on a credit report, which makes it difficult to get a car loan or mortgage. However, it’s not necessarily impossible, since there are lenders who approve loans for those with bad credit.
A consumer can file for Chapter 13 bankruptcy as often as necessary, while Chapter 7 is available only once every six years. However, it’s hopeful that one bankruptcy is all it will take for someone to get back on their feet. Also, no bankruptcy can relieve a person of alimony, child support or student loan debt, so these are debts that must be paid regardless.
For consumers acting in good faith and looking to repay debt – rather than have it wiped away immediately – Chapter 13 is the preferred option. Chapter 13 can help those struggling with debt hang on to their possessions. And while a bankruptcy can stay on a credit report for a decade, it’s possible to apply for credit cards and loans during that time.
Source: FindLaw, “Pros and Cons of Declaring Bankruptcy under Chapter,” accessed Feb. 15, 2015