Advantages of Chapter 13 Bankruptcy Over Chapter 7


Posted about 4 years ago. 2 helpful votes



Keeping Your Assets

Perhaps the most important advantage is that Chapter 13 ploans allow you to retain your assets, so long as you make the required payments.


Discharging Debts

Another distinction between Chapter 7 and Chapter 13 is that a few debts are dischargeable under CHapter 13 that are not dischargeable under Chapter 7 (such as property settlement debts and debts for willful property damage).


Co-Signed Loans

Under Chapter 13, if you had people co-sign any of your consumer loans or other credit representing consumenr debts, and the collateral for such loans is in your possession, your creditors cannot collect from these cosigns until it is clear that the Chapter 13 plan will not pay the entire amount owed to the creditors. This is called a "co-debtor automatic stay." In contrast, if you file Chapter 7, your creditors will have the right to demand payment from your cosigners immediately.


Reinstate Your Mortgage By Curing Delinquest Mortgage Payments On Your Home

Chapter 13 permits you to makeup your delinquent mortgage payments over the life of your plan, while you also continue to make your regular monthly payments.


Use More Often

Another advantage of Chapter 13 is that you can use if more often than Chapter 7. The law forbids you to receive a discharge under chapter 7 more than once every eight (8) years. However, Chapter 13 allows you to file repeatedly, and receive the benefits of the automatic stay, though each filing will appear on your credit record and will be reviewed by the trustee to prevent abuse. Remember that any Chapter 13 plans must be filed in good faith.

Additional Resources

Mark Wilk Law, PLLC

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