One of the first things a bankruptcy lawyer does during a consultation visit is to examine your income and debts to see which branch you should use. You might learn that you qualify for Chapter 7 and for Chapter 13, and many would rather use Chapter 7. Chapter 7 is not always the best choice, though. Here are four situations where you should consider Chapter 13 bankruptcy, even if you meet the requirements for Chapter 7.
When You Face Foreclosure
If you miss even one house payment, your lender can pursue foreclosure of your home. Are you worried about this problem? Are you facing foreclosure right now? If you want to avoid losing your home through foreclosure and decide to use bankruptcy, you must use Chapter 13. Chapter 7 does not stop a foreclosure or help you catch up on arrearage. Chapter 13 does help, though.
When You Face Repossession of Your Car
The same principle is true for people who face repossession of their vehicles. If you missed a payment or two on your car, you could lose the vehicle to repossession. Chapter 7 does not help in this situation, but Chapter 13 does. If you want to keep your car, you can if you use Chapter 13, if you follow the payment plan your lawyer creates.
When You Have an Underwater Mortgage
Another reason to use Chapter 13 instead of Chapter 7 is for relief with an underwater mortgage. If you owe more money on your property than it is worth, you have an underwater mortgage. Many people end up with underwater mortgages from taking out second or third loans on their houses. If you owe more on your home than it is worth, using Chapter 13 may provide a lot of relief to you. This relief is not something you can acquire through a Chapter 7 case.
When You Want to Repay Your Debts
There are also times when people choose Chapter 13 instead of Chapter 7 because they want to repay their debts. Some people do not want forgiveness of the debts they owe, so they choose Chapter 13 to have a way to repay the money they owe.
If you are interested in Chapter 7 or Chapter 13, contact a bankruptcy law firm. A lawyer can help you determine which branch you should use for the maximum benefits. Call a law firm today to schedule a consultation visit.