Choosing Chapter 13 Bankruptcy

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.



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