As a Sacramento bankruptcy lawyer I am often asked about the various types of bankruptcy and which type I feel is “best”.
The fact is that whichever type ends up meeting my client’s needs is the “best”, but in a general sort of way I would say that Chapter 13 has more benefits than Chapter 7. True, Chapter 7 allows you to walk away from your debts, but it is a total liquidation. You keep nothing and is on your credit report longer than Chapter 13 or Chapter 11. Not that this should deter someone who really needs to file for Chapter 7. It certainly has its place and it actually doesn’t destroy your credit the way that many people believe it does. In fact, you can get credit right away. Why I prefer Chapter 13 is for the following reasons:
- You can keep your possessions. Chapter 13 is a debt restructuring so it enables you to keep your car, your house, etc.
- It forces creditors to the table and agree to fair terms.
- It doesn’t stay on your credit report as long as Chapter 7.
- The courts generally issue terms that you can live with and put away money for savings—hence giving you a fresh start without having to use a “nuclear” option.
- Anything that is not paid off in 3-5 years is discharged.
This Sacramento bankruptcy attorney loves Chapter 13 because it allows people to pay back their debts—which most people actually want to do—just at terms that are reasonable and fair. Their lives do not become unsettled with moving, readjusting, etc. They keep their home, their cars, and their pride.
The downsides are, of course, that the debts are not entirely discharged and the entire process takes much longer than Chapter 7. However, there is still an automatic stay on collections, foreclosure, and other harassments the moment that you file for Chapter 13. Moreover, should the terms of Chapter 13 not meet the needs of the individual it can be dismissed and Chapter 7 proceedings filed. My personal experience with Chapter 13 as a Sacramento bankruptcy lawyer is that judges understand what people are able to do and what they are not. Very seldom (if at all since I cannot remember any occasions off the top of my head) are my clients met with terms that they cannot ably meet.
If you are afraid of foreclosure, if you are in way over your head with debt due to job loss or medical bills, please come see me. I can help. We can work with creditors or pursue bankruptcy options if that is your wish. Don’t lose another night’s sleep over debt.
And that’s the conclusion to the latest blog from your humble Sacramento bankruptcy attorney!
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