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Why Would Someone Choose Chapter 13 Over Chapter 7 Bankruptcy?

Facing bankruptcy is a challenging time for anyone, and making informed choices about the options available to you can mean the difference between a clean financial slate or mountains of unplayable debt. Choosing Chapter 13 or Chapter 7 bankruptcy in New York can significantly impact your financial recovery and future stability. Understanding your options thoroughly, with the help of a seasoned bankruptcy attorney like Grady BK, PLLC in Central New York, can help you tailor a solution to your unique financial needs.

Navigating a bankruptcy process can be scary, and the decision should always be made with a complete understanding of the legal implications and benefits it offers. But if you’re considering bankruptcy in Central New York, we can help you gain insight into the process and make informed decisions that align with your goals.

If you need a bankruptcy lawyer with experience, patience, and compassion, call Grady BK, PLLC today.

The Advantages of Chapter 13 Bankruptcy Over Chapter 7:

The Retention of Property

One of the primary reasons people choose Chapter 13 bankruptcy in Central New York is the ability to keep their personal property and essential assets. Contrary to popular belief, neither Chapter 7 nor Chapter 13 require you to sell your assets to pay back the money you owe. Instead, Chapter 13 lets you keep your home, cars, and other valuable assets while reorganizing your debts into manageable chunks.

Your protected assets will remain your private property because the court understands you can’t repay your debts without them. You’ll also keep any assets that help you make a living, like work equipment or business properties. The goal of Chapter 13 is not to punish you for allowing your debt to become unmanageable; it’s to provide you with a clear repayment plan you can afford. Your bankruptcy attorney will explain this in more detail while examining your assets and debts.

Flexible Repayment Plans

Chapter 13 bankruptcy offers the advantage of restructuring debts into a manageable repayment plan and eliminating pressure from creditors. The plan typically lasts three to five years and is specifically designed to be affordable for your unique situation. You’ll reduce or eliminate unsecured debts like credit cards, and lower the monthly payments on secured debts like property or business assets. You’ll also be able to stop the foreclosure process on your home immediately and negotiate a plan to catch up on missed mortgage payments while keeping up with the current ones.

Long-term Financial Stability

Filing for Chapter 13 can help people find a more stable financial future by negotiating a repayment plan that meets all their financial needs. By the end of the 3 to 5-year plan, you will have demonstrated your commitment to repaying your debts. Therefore, your remaining unsecured debts (credit cards, personal loans, medical bills, etc.) will be discharged (wiped away) entirely.

You’ll be free to start anew with a clean financial slate and a better outlook for the future. You’ll be able to follow the provided steps for recovering your credit score and removing the negative impact that bankruptcy can cause. Most of the clients our bankruptcy attorney assists are able to recover their credit scores within a year or two of filing for bankruptcy. Chapter 13 is then automatically removed from your credit report seven years from the date that you file.

Protection Against Foreclosure

A significant benefit of filing for Chapter 13 bankruptcy is the legal protection it offers against the foreclosure of your home. As soon as Chapter 13 is filed, an automatic stay goes into effect that halts the foreclosure process, as well as any harassment you experience from creditors. Your repayment plan will include your missed mortgage payments and be affordable enough for you to make future ones. Our bankruptcy attorney will assess your situation and advise you on all of your available options.

Who Can Benefit Most from a Chapter 13 Repayment Plan?

Homeowners with Equity

If you own a house and it’s worth more than what you owe on it, but you’re behind on payments because of temporary money problems, Chapter 13 can help you keep your home and give you time to catch up on those missed payments. This is especially helpful if the value of homes in your area changes often, which is a common occurrence in Central New York.

High-Income Earners

If you make more than a certain amount of money, you might not qualify for Chapter 7 bankruptcy. Chapter 7 is a quick and straightforward bankruptcy type that doesn’t work for people with complex finances. A “means test” can be used to determine your eligibility for Chapter 7 by comparing your disposable income with other families of your size in our state. If you make more than the average, you fail the test and won’t qualify for Chapter 7. Chapter 13 will be the best option for maintaining your lifestyle while reducing your debt.

People with Co-Signers on Their Debts

If you have a loan that someone co-signed with you, Chapter 13 bankruptcy can protect that person from having to repay your debt. It’s a responsible way to deal with loans that doesn’t put the burden on anyone else. Overall, Chapter 13 gives people with a steady income a chance to reorganize their finances without the usual downsides of other bankruptcy types.

Choose Chapter 7 or Chapter 13: Choose Grady BK, PLLC

Choosing between Chapter 7 and Chapter 13 bankruptcy involves important decisions that impact your financial future. For residents of Central New York, speaking with the experienced bankruptcy attorney at Grady BK, PLLC can provide clarity and direction when you need it most. Our team can tailor the bankruptcy process to your specific situation and guide you on the best possible path for financial health and stability. If you’re considering bankruptcy, call us today at (315) 299-9005.