When Chapter 13 is Better Than a Chapter 7

Chapter 13, Chapter 7 Bankruptcy0 comments

A lot of people believe that between a Chapter 7and a Chapter 13 bankruptcy, Chapter 7 is better of the two. They feel this way because with Chapter 7, often a debtor can wipe out or erase all of their qualifying debts without having to pay any money back. In contrast, Chapter 13 involves a 3 to 5-year repayment plan where a debtor has to pay off all, or a portion of their debts. It’s understandable why people would think a Chapter 7 is superior, but it’s not that simple.

Each bankruptcy chapter has its unique advantages and disadvantages, and they each give the debtor different tools. For some debtors, Chapter 13 is better because it will be more beneficial in the long run. For example, Chapter 13 allows a debtor to protect their home from foreclosure, while Chapter 7 does not.

Keeping Property with a Chapter 13

If keeping one’s home is a top priority for a debtor (which is common when the home has a lot of equity), a Chapter 13 may be the only way to go. Also, if a debtor has fallen behind on payments for secured debts, a Chapter 7 doesn’t have a way to let them keep their property, whereas a Chapter 13 does. Then, for some debtors, Chapter 13 is their only option because they don’t qualify for Chapter 7 because their income is too high.

“What if I’m eligible for a Chapter 7 and a Chapter 13 bankruptcy?” If you are eligible for both bankruptcies, you may be in the situation where you’ll benefit more by filing a Chapter 13 instead of Chapter 7. Read on as we explain this further.

When a Chapter 13 may be better than a Chapter 7:

  • You have debts that cannot be discharged in Chapter 7, such as child support or spousal support arrears, or recent taxes, and it would be helpful to get time to pay these debts off.
  • You do not have all the funds to pay off your debts and your wages are being garnished. With the bankruptcy court’s protection, you’ll get relief and be able to pay them off in a more reasonable time.
  • You want to save your home from foreclosure.
  • You do not want your vehicles to be repossessed.
  • You have non-exempt property, such as a second home that you would lose in Chapter 7.

Is Chapter 13 better for you? To find out, contact our firm to meet with a York Chapter 13 lawyer for free. We would be glad to help you determine what’s best for you.

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