5 Reasons To Use Chapter 13 Bankruptcy Rather Than Chapter 7

While most people assume that filing for Chapter 7 bankruptcy is automatically better because your debt is wiped out, rather than Chapter 13 where you will still retain some of the debt, this is not necessarily the case. Here are 5 reasons to use Chapter 13 bankruptcy rather than to file for Chapter 7.

Behind On A Mortgage Or A Loan

If have fallen behind paying your mortgage for your home or a loan for an item such as a car, then you might want to take into consideration using Chapter 13 rather than filing for Chapter 7. Under the clauses of Chapter 13 bankruptcy, you can pay back the missed payments that you failed to make over a specified period of time and revert back to the original agreement on the mortgage or loan. This is simply not possible under the clauses of Chapter 7 and you will be forced to forfeit numerous loans and perhaps even your mortgage.

Tax Obligations

One of the problems about Chapter 7 is that it is quite strict. There numerous tax obligations and other forms of debt that simply are not forgiven or dischargeable under the clauses of Chapter 7. This means that you will be forced to use Chapter 13. Don't worry, however. Whenever you file for Chapter 13, repaying these debts and tax obligations that are not covered by Chapter 7 becomes quite a bit easier, as you can renegotiate the terms of payment as well as the time frame in which you are allowed to repay these debts.

Sincere Desire

If you have a truly sincere desire to repay your debts, and you also need the protection of bankruptcy, then Chapter 13 is the way to go for you. This might be the case due to the fact that creditors and their lawyers are coming after you, or it might be the case simply because you need the formal structure of Chapter 13 to keep you in check about paying your debts. Sometimes, the motivation of bankruptcy is one of the greatest factors in helping you pay back your outstanding loans.

You Have Nonexempt Property That You Wish To Keep

One of the biggest problems that people find under the clauses of Chapter 7 is that all property that is not exempt from creditors under state or federal law will be forfeit. This is a huge problem, especially for people that are second generation or above property owners who have kept their property in the family over years upon years. With Chapter 13, you do not have to forfeit any property; but rather, the debt is paid off out of your own income. If you have property that you cannot bear to part with, Chapter 13 might be the plan for you.

You Have A Co-debtor On A Debt

If you decide to file for Chapter 7 bankruptcy, and you happen to have a co-debtor that is implicit in your debt, he or she will not have the loan forgiven or discharged simply because you filed for Chapter 7 bankruptcy. If you file for Chapter 13 bankruptcy, however, the creditor will not be allowed to harangue your co-debtor, so long as you properly pay on your debts out of your own income.

Hopefully, this brief article has shed some light on some reasons you may wish to file for Chapter 13, rather than Chapter 7. Chapter 13 bankruptcy might be preferable to you for a wide range of reasons. If you are thinking about filing for bankruptcy, talk with experienced bankruptcy attorneys in order to better understand the differences between Chapter 13 and Chapter 7 bankruptcy. 


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