Sacramento bankruptcy, Chapter 7 and Chapter 13 are the two most commonly sought. Both can offer the benefit of financial freedom, but each comes with unique considerations and benefits. While most people think Chapter 7 is the most beneficial form of bankruptcy, many people find there are more benefits of a Chapter 13. Here is why.
Benefits Of A Chapter 13
Eligibility – Not everyone qualifies for a Chapter 7, and qualifying for Chapter 13 is much easier in most cases. This is due to the Means Test requirement that sets forth an evaluation of a debtor’s family size and income against the median level of their state. Anyone whose income exceeds this threshold is not eligible for filing Chapter 7 and must file for Chapter 13 instead.
Flexibility – Chapter 13 offers more flexibility in debt relief because it allows for the resolution of more types of debt. For example, priority debts like secured debts, back due support payments and some taxes may be eligible to be repaid through a Chapter 13 bankruptcy; whereas, they would not be eligible for elimination in a Chapter 7 bankruptcy. This allows for people to resolve debts that are tied to assets they intent to keep and have liens lifting on property they owe a debt on.
Future – Repaying debts through a Chapter 13 payment plan allows you not only to keep secured assets like a home or a car, but can also keep you in a better financial standing. Many creditors favor Chapter 13 filers over Chapter 7, namely because the repayment requirement of Chapter 13 signals less risk in future borrowing.