13 Reasons To File A Chapter 13 Bankruptcy

16 Nov 13 Reasons To File A Chapter 13 Bankruptcy

If you are thinking about filing bankruptcy, the best advice I can give you is to discuss your financial situation with a competent bankruptcy attorney. She will tell you that for most consumers, there are often two options: file a Chapter 7 or a Chapter 13 bankruptcy.

There are many differences between these two types of bankruptcies and many reasons to pick one over the other. Here is my list of 13 reasons that a Chapter 13 might be the right choice:

  1. Flexibility: you can dismiss the case at any time or even convert it to a Chapter 7. You can modify a plan if income changes or you decide to give up a house or a car. You can refinance or sell a house during the plan.
  2. A Chapter 13 will save a house from foreclosure as long as you can make the payments.
  3. You can strip a wholly unsecured second mortgage; or value a car if you’ve had it more than 910 days.
  4. You can challenge the costs added to your mortgage by the lender.
  5. Trustees want the plan to succeed and will work with you to get it confirmed.
  6. There are more debts that can be discharged including some divorce payments and damages for malicious and willful acts.
  7. Your attorney’s fees can be spread out rather than all due before filing.
  8. A Chapter 13 can be filed for one spouse even when married. (This is true of Chapter 7s also, but there are more advantages to having one spouse in a Chapter 13 plan.)
  9. You can avoid having to reaffirm a car in order to keep it.
  10. You can cure a tax problem or a Domestic Support Obligation (child support or alimony) over 60 months.
  11. You can stretch out your payments for a car or other secured debt.
  12. You wont lose non-exempt property.
  13. Depending upon your income a Chapter 7 case can be challenged by the US Trustee, but not a Chapter 13.

This list is not meant to be exhaustive of all of the advantages of filing a Chapter 13 instead of a Chapter 7. As with all legal problems like this one, its always best to consult a competent bankruptcy attorney in your area.

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Douglas Jacobs is a California bankruptcy attorney and partner in the Chico law firm of Jacobs, Anderson, Potter & Chaplin. Since 1988, Mr. Jacobs has taught Constitutional law and Debtor-Creditor/Bankruptcy law at the Cal Northern School of Law. He has served as Dean of Students since 1994. He is a frequent lecturer on the subject of consumer bankruptcy law, and has spoken at both state and national levels.
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