Are you trying to decide between Chapter 13 bankruptcy and Chapter 7 bankruptcy? Most people think about Chapter 7 when they're considering bankruptcy, but Chapter 13 can be very useful, too. A bankruptcy attorney can help you figure out the best solution for you.

You Can End a Foreclosure or Repossession Process

A Chapter 7 bankruptcy will allow you to stall a foreclosure or repossession, as debt collection actions cannot continue when you're in the process of declaring bankruptcy. But a Chapter 13 bankruptcy gives you the chance to actually cease a foreclosure or repossession process -- permanently. Because a Chapter 13 bankruptcy involves the restructuring of debt, as long as you can actually afford your mortgage, vehicle loan or related debt, you can avoid a foreclosure or repossession entirely. 

You Can Be Debt Free Within Three Years

The restructuring of debt involved in Chapter 13 bankruptcy will be targeted at getting you debt free within three to five years, depending on your financial situation. If you have enough income (or few enough debts), you can theoretically be debt free within three years -- and then begin improving your credit. A Chapter 7 bankruptcy involves the dissolution of your debts, which will affect your financial status and credit report for much longer.

You Can Keep More of Your Assets

Chapter 7 bankruptcy usually requires that you get rid of most of your assets, barring a few specific exemptions. But if you want to save more of your assets, a Chapter 13 bankruptcy is usually more successful. As long as you can restructure your debts so that they can be paid off within a reasonable amount of time, you're usually allowed to keep personal assets, such as jewelry and cash accounts. However, it may be beneficial to liquidate some of these assets to pay off the debt faster.

Your Credit Will Recover Much Faster

Though all bankruptcies will be reported on your credit report, a Chapter 13 bankruptcy will usually improve your credit faster as your creditors are paid down. A Chapter 7 bankruptcy will often affect your credit report adversely for between seven to ten years, while a person who has undergone Chapter 13 bankruptcy should start seeing credit improvement following the balances being paid off. 

There are some situations in which Chapter 13 bankruptcy may not be suitable. If you sincerely cannot pay off your debts, even if they are structured, then a Chapter 7 bankruptcy is probably best. You may want to see a bankruptcy attorney at Sever Law Office before you make a decision.