Reasons to file a Chapter 13
By Nicholas Ortiz, Boston Bankruptcy Attorney on Jul 22, 2009 in Chapter 13 Bankruptcy
Individuals file Chapter 13 bankruptcy for a variety of reasons. The following are some of the most common ones we hear from clients:
1. You fell behind on your mortgage or car payments and need bankruptcy to catch up.
2. You make more than the median income in your state and do not pass the “Means Test.”
3. You are not able to pay all of your debts but would like the opportunity to pay at least part of them back.
4. You are able to pay all of your debts but would like to make one payment every month rather than several and would like a Chapter 13 repayment plan to help you stay organized and achieve your goal of becoming debt-free within reasonable amount of time.
5. You would like the credit reporting benefit of filing a Chapter 13 (which stays on your credit report for 7 years from the date of filing, as opposed to a Chapter 7 which stays on the report for 10 years).
6. You have a second mortgage or home equity line of credit (HELOC) which is “wholly unsecured” (e.g. your property is worth less than you owe on your first mortgage) and would like to make use of the Chapter 13 “lien-stripping” provisions.
7. You have non-exempt property which you want to keep and would like to pay the value of the property over the course of a Chapter 13 repayment plan.
8. You have certain non-dischargeable debts such as recent tax debt which you would like to pay off over time through the use of a Chapter 13 repayment plan.
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