If one of the primary goals you have with bankruptcy is to save your house and car, you would probably want to use Chapter 13. Chapter 13 will provide more relief for this purpose than Chapter 7. Here are some essential things to know about how both branches of bankruptcy work when your goal is to save your house and car.

Chapter 7 Has Limits

If you are not struggling with your car payments or mortgage, Chapter 7 may work fine for you. Chapter 7 has limits on how much help it provides, though, and you must understand these limits. The primary thing to know is that Chapter 7 does not provide relief for people who have missed some payments on their loans. If you have a past-due balance on your mortgage and are on the verge of losing your home to foreclosure, you might lose it in a Chapter 7 case. The only way you could save it is by paying the past-due balance you owe and staying caught up with the payments.

Chapter 13 Categorizes Homes and Cars as Priorities

With a Chapter 13 case, you can save these assets if you want. When you file for this branch of bankruptcy, your lawyer will examine your debts and will place them in categories. The first category is for priority debts, and the second is non-priority debts. Your house and car will fall into the priority debt category. Priority debts are the types of debts you must repay if you use Chapter 13. If you follow through with repaying them, then you get to keep them.

You Get Time to Pay the Debts

The best part about Chapter 13 is that you do not have to come up with a lump sum of cash right now. You do not have to pay off the arrears on debts when you file. You get time to do this. One critical part of a Chapter 13 plan is the time you receive to repay your debts. You will get up to five years to pay off all the debts you owe. When you complete the plan, you should be in good financial shape. You will still have debts, such as the remainder of your mortgage, but you will no longer have any past-due balances.

Are you interested in learning more about Chapter 13 or Chapter 7? If so, meet with a lawyer at a firm like Molleur Law Office today.