Sometimes Chapter 13 bankruptcy is the only option for you – if you are not eligible for Chapter 7 bankruptcy, because you did not pass the “means test.” (See Qualifying for Chapter 7 HERE)
And, under some circumstance, Chapter 13 bankruptcy may be better option for you than Chapter 7 bankruptcy – even if you do qualify for Chapter 7!
In Chapter 7 bankruptcy debts are “discharged” and in Chapter 13 Bankruptcy debts are repaid. However, don’t assume that Chapter 7 bankruptcy is always better than Chapter 13 bankruptcy. There may be some good reasons to file for Chapter 13 bankruptcy.
Chapter 13 Bankruptcy May be Better for Home Loans & Car Notes
One advantage to Chapter 13 Bankruptcy is that if you are behind on your mortgage or car loan – and want to make up the missed payments over time and reinstate the original agreement – you can ONLY make up missed payments in Chapter 13 bankruptcy.
Chapter 13 Bankruptcy May be Better if you Owe Taxes or a Student Loan
Also – if you have a tax debt or a student loan debt, these can NOT be discharged in Chapter 7. However, Chapter 13 allows you to reduce your payments – and enter into a payment agreement to pay them off over time.
Chapter 13 Bankruptcy May be Better if you Have “Non-Exempt” Property
Additionally, if you have “nonexempt” property that you want to keep Chapter 13 bankruptcy might be better for you. When you file for Chapter 7 bankruptcy, you can ONLY keep “exempt property” which is specific property protected from creditors. But under Chapter 7 You have to give your nonexempt property to the bankruptcy trustee – who will then sell it off and give the money to your creditors.
In Chapter 13, you don’t have to give up any of your property that you don’t want to! Instead, you simply enter into a repayment plan that allows you to repay your debts over time out of your income.
Chapter 13 Bankruptcy May be Better if you Have a Co-Debtor or Co-Signer
Also – if you have a co-debtor or cosigner on a debt and you file for Chapter 7 bankruptcy, your co-debtor / cosigner will still be on the hook for that debt! So then your creditor will just go after the co-debtor / cosigner for the money you owe. Often a cosigner is a parent, friend or someone you do not want to be left “holding the bag” for your debt. So, if you file for Chapter 13 bankruptcy, creditors will leave your cosigner alone, provided you keep up with your bankruptcy re-payment plan.
Our experienced, affordable Wayne County bankruptcy lawyers can help you determine which bankruptcy is best for you. Because our attorneys are genuinely here to help you, we offer a variety of payment methods and affordable payment plans to help you get started right away.
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The sooner you file bankruptcy, the sooner you stop garnishments, stop foreclosure actions, stop repossessions and start getting your life back on track. We never want you to delay filing bankruptcy and risk getting further in debt and/or losing your home or car. So we will custom tailor a payment plan that works for you – so you can get started right away.