When most people think about bankruptcy, they think about what's known as Chapter 7 bankruptcy. This form of bankruptcy involves a one-time forfeit of eligible assets and payment to creditors, after which the remaining qualifying debts are discharged. However, Chapter 13, or repayment, bankruptcy may be a better option in a number of situations. Why should you consider it? Here are a few ideal times. 

1. When You Have Ethical Concerns 

Some Americans hesitate to seek bankruptcy protection even though they need it because they feel bad about not paying back their debts. If you have ethical concerns with debt discharge, a repayment plan often allows you to pay back most or all of your debts over a manageable period of time. 

2. When You Want to Keep Assets

A debtor can keep a few assets even in Chapter 7 by using a list of exemptions provided by their state or the federal rules. However, these exemptions are relatively low for most categories and may not provide enough protection to keep larger assets like a home, car, or heirlooms.

Chapter 13 bankruptcy doesn't liquidate assets but rather uses income-based repayment, so you may be able to keep more of your stuff. This is important if you want to protect specific higher-value assets like an inheritance, investments, or your business. 

3. When You Have Time

Chapter 7 bankruptcy is the fastest means to complete bankruptcy and exit it successfully. Some liquidation cases may take as little as a few months. Certainly, a three to five-year repayment plan will be a longer commitment. However, you get many of the same protections — such as the automatic stay that prevents further collections activities — as you do with the shorter term. 

So, if you don't have a pressing need to exit bankruptcy as soon as possible, seriously consider whether the longer, slower road of a repayment plan could be a better choice. You may learn more money management skills, your relationship with creditors is less damaged, you pay back more of your honest debts, and you can keep more assets. 

Where to Learn More

Want to know more about the value of opting for Chapter 13 bankruptcy and using a repayment plan? Start by meeting with an experienced bankruptcy attorney in your state today. With their expertise and work with many clients like yourself, you can choose the best route to debt freedom — no matter what that route is.