Definitely one of the hardest things about filing bankruptcy is figuring out what chapter you should file under. You can file under either chapter 7 or chapter 13. Each chapter has its upsides and its downsides. As a Seattle – Kent bankruptcy lawyer, I can help you make the right choice.
Sometimes people are hesitant about choosing a chapter 13 bankruptcy, because they worry about the payment plan. A couple of things right off the bat: 1) you don’t have to repay all of your creditors in full, and 2) the payments are reasonable. The fact is that there are many reasons to choose a chapter 13 bankruptcy over a chapter 7 bankruptcy. The means test determines both the length of a chapter 13 plan and the amount of your plan payment. Your chapter 13 bankruptcy lawyer can help you with the means test.
Benefits of Chapter 13 Bankruptcy
- You do not have to repay your creditors in full.
- You can save your home from foreclosure with a chapter 13 bankruptcy. Chapter 13 stops foreclosure, and lets get caught up on your payments.
- You can get rid of a second mortgage in a chapter 13.
- You can pay back taxes, even if it means your other unsecured creditors don’t get anything.
- Chapter 13 bankruptcy protects assets that you could not protect in a chapter 7.
- Chapter 13 plan payments are based on your expenses minus your income.
- If you’ve had your car for more than two and a half years, then you can reduce your car payment.
- In most cases, your attorney does not have to be paid upfront.
- If you lost your license because of unpaid tickets, you can get it back with a chapter 13 bankruptcy. Make sure your chapter 13 lawyer is experienced with the Department of Licensing and their bankruptcy requirements.
- If your income goes down or you lose your job, you do not have to complete the plan. You may be eligible for a hardship discharge.
Downsides to a Chapter 13 Bankruptcy
- You have to make monthly payments. If you cannot make your plan payments, you may still be able to either convert to a chapter 7 or get a hardship discharge.
- Chapter 13 bankruptcy is much more complicated and requires an experienced bankruptcy attorney.
- A chapter 13 lasts for a minimum of 3 years. If your income is above a certain amount, you will have to do a 5 year plan. A Seattle – Kent chapter 13 bankruptcy lawyer, can help you understand how long your plan lasts.
Conclusion – Chapter 13 Upsides and Downsides
A chapter 13 offers a more powerful discharge than a chapter 7. In addition, you can protect more property in a chapter 13. The downside is that you do have to commit to a payment plan. This can be hard for some people; however, the benefits outweigh the difficulty. Because a chapter 13 is more complicated and requires a strong knowledge of the bankruptcy laws, make sure you select a Seattle – Kent chapter 13 lawyer who is able to give you the best representation possible.