A Chapter 13 may be a better solution for you for several reasons. In some cases a Chapter 7 bankruptcy may not provide all the relief that you need in order to get you out of debt. Chapter 7 is not necessarily the best solution for everybody. While it is always better to consult an attorney to see what options are best for you, some indicators that a Chapter 13 might be in order are:
- You owe certain kinds of debts that cannot be discharged, but require a restructuring of your financial situation.
- You make too much money to file for bankruptcy under Chapter 7.
- You have significant equity in real property or other items.
- You want, and can afford to, repay at least a portion of your debt to your creditors in a structured repayment plan over time.
- Unlike Chapter 7, Chapter 13 allows you to propose a plan reducing some secured interest rates and potentially restructuring some of your debts.
- You may have a secured loan (i.e. a second mortgage) that exceeds the value of the property and in which case in a Chapter 13, you may be permitted to cram it down or take advantage of the loss mitigation portal in bankruptcy.
A Chapter 13 bankruptcy is a significant undertaking. Filing for Chapter 13 requires that you undertake a multiyear repayment plan in order to receive the benefits of a Chapter 13 discharge. The potential benefit of a Chapter 13, is that you get to keep most of your property regardless of equity and you may get to remove some of your secured debt.
Chapter 13 is not for everybody. There are some significant requirements to participate in a Chapter 13 case. If you are interested in discussing whether a Chapter 13 case is a good move for you, please contact us or fill out our evaluation form.