You may be considering your bankruptcy options after experiencing insurmountable financial challenges. Like most Virginia residents in the same situation, you have two main choices for personal bankruptcy – Chapter 7 and Chapter 13. Unlike Chapter 7 bankruptcy, which eliminates eligible debt, Chapter 13 bankruptcy gives you a chance to restructure your debts and make manageable payments over a three to five-year period.
Why would you want to repay your debt if you have the option of discharging it through Chapter 7? One easy answer is that, due to your income and employment, you might not be eligible for Chapter 7. However, as FindLaw explains, Chapter 13 bankruptcy has different advantages, which may be better for your circumstances.
One of the most notable benefits of qualifying for Chapter 13 bankruptcy is the ability to save your home from foreclosure and your vehicles from repossession. Additionally, Chapter 13 sticks to your credit report for less time than a Chapter 7 bankruptcy – seven and 10 years, respectively. You may also find it more appealing to make good on your debts and repay them to the best of your ability, rather than have them disappear. After the end of the repayment period, some of your remaining debt may even be discharged.
Both types of personal bankruptcy have advantages and limitations. Therefore, it is important to understand the differences between Chapter 7 and Chapter 13 and to make an informed decision as to which option may be best for your situation. This information is meant to educate you and aid in your decision, but it should not replace the advice of a lawyer.