Individuals who are in over their heads with debt often envision a future without any monetary obligations. Most of these individuals want to obtain that debt free life immediately, which they can do through Chapter 7 bankruptcy. However, though Chapter 7 works to wipe away debt almost immediately, it is not always preferable over Chapter 13.

Chapter 13 bankruptcy — otherwise known as the wage earner’s bankruptcy — enables individuals who have a steady income to develop a repayment plan that lasts between three and five years, depending on the person’s income. Once the three to five years is up, the bankruptcy courts will discharge any remaining debt, thereby allowing the debtor to obtain the much-desired fresh financial start. While it is difficult for many struggling individuals to see the merits of Chapter 13, there are quite a few.

Avoid foreclosure

According to FindLaw, the biggest benefit of Chapter 13 is its capacity to help debtors avoid foreclosure and keep their homes. Upon filing for Chapter 13, an automatic stay goes into place. This stay stops foreclosure actions and gives homeowners a chance to catch up on delinquent payments. If, during the three to five-year period, a homeowner can make payments in accordance with the new payment plan, he or she can keep the home at the end of the bankruptcy. Moreover, the bankruptcy courts will discharge any mortgage arrears that remain (if there are any).

Repair credit sooner

A Chapter 7 bankruptcy stays on a person’s credit report for up to 10 years. By contrast, a Chapter 13 says on a credit report for seven years. For many individuals who wish to start over comfortably, this perk is huge, as it affords the opportunity to finance a new home, vehicle and other major purchases sooner rather than later.

Keep a vehicle

In addition to being able to keep their homes, Chapter 13 filers also have the option to keep their vehicles, according to the National Bankruptcy Forum. In Chapter 13, debtors have the option to modify secured debt to meet the value of the collateral. In terms of an auto loan, this would mean the creditor would reduce the loan to match the current value of the vehicle, thereby significantly reducing the remaining loan amount in most situations.