Bankruptcy is something that can help people overcome debt problems by offering them a new start, and there are two main types of bankruptcies available for people to use. While most people prefer using Chapter 7, because it offers complete forgiveness of many debts, Chapter 13 bankruptcy is often the better option. Chapter 7 has limits, which is why Chapter 13 might be better for you. Here are several limitations found with Chapter 7 bankruptcy.

It Cannot Permanently Stop a Foreclosure

Chapter 7 is great for saving a house if you are not past due on the payments. If you have late payments and the lender is foreclosing on the house, Chapter 7 will only stop the proceedings temporarily.

With Chapter 13, you will be able to get on a repayment plan to get caught up on your payments, and the lender must legally stop all foreclosure proceedings. As long as you make the payments determined by the bankruptcy trustee, you will not lose your home.

It Cannot Help You Catch Up on Certain Types of Debts

Chapter 7 forgives unsecured debts, like credit card bills, but it offers no relief for people who are past due on certain types of debts. Child support is an example of this. If you owe child support arrears, filing for Chapter 13 might be more beneficial. This branch of bankruptcy would work the arrears into your repayment plan to help you get caught up on your payments. Chapter 7 would not help with this at all.

It Cannot Help You Eliminate Liens on Your Home

The other limitation you may run into with Chapter 7 involves second and third mortgages on your house. If you have a second mortgage on your home, and if your home is worth less than the amount you owe on your first mortgage and your second one, you would find no relief with Chapter 7.

With Chapter 13, there is a process called lien stripping, which is used to wipe out second and third mortgages when homeowners are underwater on their mortgages. If you visit a lawyer, he or she would be able to tell you if you qualify for lien stripping through Chapter 13.

If you need bankruptcy for any of these reasons, you might be better off looking into Chapter 13. Chapter 13 is a great option for many people, and you can learn more about both types of bankruptcies by talking to a bankruptcy lawyer today.