Chapter 7 bankruptcy may seem like a better choice than a Chapter 13 bankruptcy. After all, it takes less time and you don’t have to pay your creditors back any money.
Sounds better, right?
Wrong.
In fact, there are a number of reasons why Chapter 13 bankruptcy is the preferred choice of people who want to protect their rights.
Here are just a few of the many reasons to file for Chapter 13 bankruptcy rather than Chapter 7 bankruptcy:
- You can file a Chapter 13 bankruptcy alone and, if it doesn’t work out, your spouse can file a Chapter 13. In both cases, you and your spouse are protected by the automatic stay in Chapter 13.
- When you file a Chapter 13 bankruptcy, you do not surrender your rights to file any lawsuits against creditors and bill collectors. Most people who file for bankruptcy don’t realize that very often the harassment they’ve suffered at the hands of bill collectors is against the law.
- If you own a car, you can file Chapter 13 bankruptcy and keep the car without reaffirming the debt.
- You can file a Chapter 13 bankruptcy and provide for your legal fees to be paid through your Chapter 13 Plan. This allows you to get your case filed immediately rather than waiting until your lawyer is paid in full.
- Chapter 13 trustees want to make your case work, whereas Chapter 7 trustees wants to figure out a way to take your property.
- The U.S. Trustee’s Office wants people to file for Chapter 13 bankruptcy, so they are less likely to try to get your case thrown out of court.
- You can always modify your Chapter 13 Plan – or convert your case to Chapter 7 bankruptcy – if your financial situation changes.
- When you file for Chapter 13 bankruptcy you can repay without interest many debts that would not be wiped out in Chapter 7 bankruptcy.
- If you start off with a Chapter 13 case and then convert to Chapter 7 bankruptcy, you can file another Chapter 13 case in the future to stop a foreclosure or to deal with non-discharge priority claims.
- Debts incurred to pay taxes are not discharged in a Chapter 7 bankruptcy but are discharged in a 13.
- Willful and malicious injury to property is not discharged in a Chapter 7 bankruptcy but is subject to discharge in a 13 so long as the state court action has gone to judgment.
- Child support income is not included in a Chapter 13 bankruptcy, but is included in a Chapter 7 bankruptcy.
- When you file Chapter 13 bankruptcy you can reclaim personal property that was repossessed pre-petition.
- If your Chapter 13 bankruptcy doesn’t work out, you can always dismiss the case. Not so in a Chapter 7 bankruptcy.
- You can continue to repay your pension loans in a Chapter 13 bankruptcy.
- When you file a Chapter 13 bankruptcy, the court will not scrutinize the amount of money you contribute to your pension.
- Chapter 13 bankruptcy allows you to cure child support arrears, to repay back taxes, and even deal with student loans.
When you’re ready to get out of debt and get a fresh financial start, all you need to do is contact me or click at the top of this page to set up a free, no-obligation phone consultation.
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