Filing for bankruptcy is not always a good decision to make. If it is realistic for you to be able to tackle your debts by employing discipline and a good budgeting protocol, it is probably best that you avoid bankruptcy. However, if you are struggling to keep your head above water and you are feeling overwhelmed by debt, a bankruptcy filing may be the best option.

Individuals who are filing for bankruptcy generally have two potential options. They can either file for Chapter 7 bankruptcy or Chapter 13 bankruptcy. Generally speaking, Chapter 7 bankruptcy involves the liquidation of assets, whereas Chapter 13 bankruptcy involves paying back debts over time through a repayment plan. The following are some situations in which filing for Chapter 13 bankruptcy is probably a good idea.

When you want to stop creditor action

Being in significant debt often means that you are constantly subjected to calls and mails from different creditors. You may be threatened with foreclosure proceedings or worried about the actions that creditors could take against you. Filing for Chapter 13 bankruptcy initiates an automatic stay, which will mean that creditors have to stop all communication.

When you want to keep your home

The automatic stay can prevent a foreclosure proceeding. Additionally, you may be able to catch up with your missed mortgage payments in the bankruptcy repayment plan.

When you want to minimize the damage to your credit score

Your credit score will likely be affected by any bankruptcy, but Chapter 13 bankruptcies are present on your credit history for less time than a Chapter 7 bankruptcy.

If you are considering filing for Chapter 13 bankruptcy, you should consider how the bankruptcy Chapter could be suited to your individual situation.