Most people in Tennessee and throughout the country have encountered financial challenges at some point in life. Sometimes, finances get out of hand and extra measures may be needed to get things back on track and restore financial stability. In certain circumstances, the most viable option to resolve debt and improve financial standing is to file for Chapter 13 bankruptcy.
Benefits of Chapter 13 versus other types of bankruptcy
There is often a stigma attached to filing for bankruptcy that causes some people to hesitate taking advantage of a valuable financial tool that can help them resolve a crisis and start afresh. The following list shows several reasons why many people choose to apply for this specific type of bankruptcy:
- Unsecured debt becomes frozen.
- Home foreclosure may be avoided.
- Creditors cannot attempt to collect a debt from a co-signer.
- The debtor can still sell property at any time.
- A business can remain open.
Each type of bankruptcy operates under its own eligibility requirements and benefits. For instance, by filing for Chapter 13, a homeowner may be able to keep his or her largest assets. Under a Chapter 7 bankruptcy, the same person may be required to liquidate those same assets.
How to know if it is a good time to file for Chapter 13 bankruptcy
If a financial problem arises, it can be challenging to determine whether a few basic spending adjustments may help resolve the issue or if additional debt relief support is needed. If one or more of the issues on the following list are present, it might be a good time to consider filing for bankruptcy:
- A person has disposable income but cannot keep up with monthly payments.
- Multiple credit cards are maxed.
- Collection agencies are calling on a regular basis.
- Making ends meet on a daily basis is becoming difficult or impossible.
A person may be able to resolve a minor financial crisis by using cash instead of credit, by selling some assets to generate funds or by finding a way to earn more income. Such options are not always available, however, which is why it is a good idea to research additional resources, such as Chapter 13 bankruptcy.