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What are the benefits of a Chapter 13 bankruptcy?

When most people think of bankruptcy, they imagine having to forfeit and auction off many of their assets, such as cars or homes, in order to pay off their debts. For this reason, they often do not even consider bankruptcy, even if they could greatly benefit from it. What you may not know is that such asset liquidation is only indicative of one type of bankruptcy: Chapter 7 bankruptcy. If you are concerned about having your assets sold, you may want to see if a Chapter 13 bankruptcy is right for you.

Unlike a Chapter 7 bankruptcy in Texas, people do not have to pass a means test in order to file for Chapter 13 bankruptcy. Additionally, Chapter 13 bankruptcy stays on your credit report for a shorter amount of time than a Chapter 7 bankruptcy, meaning your credit will recover much quicker as well. Chapter 13 also comes with many notable benefits, including stopping repossession of properties such as cars, stopping harassment from creditors and even stopping foreclosure on a home.

However, Chapter 13 is certainly not for everyone, and there are some issues that people should be aware of if they are considering a Chapter 13 bankruptcy filing. When it comes to Chapter 13, you are still expected to pay back your debts to the best of your ability by coming up with a 3-5 year plan, meaning that you must have a regular income in order to qualify for Chapter 13. Additionally, Chapter 13 cannot protect you from certain criminal charges, and it can only discharge debts that are known of at the time of filing.

For many people with a steady income, Chapter 13 is the ideal form of debt relief. It halts many of the sources of stress that come with debt, including harassment and foreclosure, and it does not affect credit score for the same amount of time. Additionally, filers can keep all of their assets as they pay the debts off with their income. If you are struggling with debt in Texas, consider meeting with a bankruptcy attorney to learn if a Chapter 13 filing would be right for you.

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