Chapter 13 bankruptcy vs debt consolidation, which one is a better solution?

Chapter 13 Bankruptcy is a legal process that differs from traditional debt consolidation in certain important ways. This article details some of the most significant differences. While a Chapter 13 bankruptcy is actually a type of debt consolidation, it differs from traditional debt consolidation in certain important legal aspects. The most glaring and important difference is the power it wields. Backing up Chapter 13 bankruptcy is the Federal Bankruptcy Code, which can be a huge advantage when you are needing relief from debt.

When bankruptcy becomes a necessity because of a bad financial situation, an individual will have to determine whether they should file for Chapter 7 or Chapter 13 bankruptcy. Understanding the differences between them is very important because they are separate and unique filings.

By the time you finish reading this, you will know more about Chapter 13 bankruptcy. As we all know there are a number of different types of bankruptcy and it is essential to at least know the difference. Chapter 13 is not available for all kinds of situations and it should only be filed by the best qualified candidate.

Usually (depending on the situation), individuals try to file for bankruptcy under Chapter 7 in order to get most of their outstanding debts discharged. The time taken to do this is also quite less as compared to filing under Chapter 13. You can file for bankruptcy under Chapter 7 only if you pass the Means Test. Unlike Chapter 7, filing under Chapter 13 will give you the chance to repay your outstanding debts over a longer period of time, usually between 3 to 5 years. You also have the chance to keep all your property.

As good as it may seem that filing bankruptcy will help you out of such financial mess, it can also lead to much confusion in your mind trying to figure out what is Chapter Thirteen Bankruptcy and how does it differ from chapter seven bankruptcy. Chapter 13 bankruptcy may cost you about $185 to file and it is commonly also referred to as reorganization bankruptcy and such a form of bankruptcy is generally filed by persons that wish to eliminate their debts in three to five year’s time. Under Chapter 13 bankruptcy, individuals can keep part of their possessions and also have a means to finance some of their day to day expenses while at the same time still have some money left over to pay off their debts.