How Does A Chapter 7 Bankruptcy Compare To A Chapter 13?

When you have a great deal of debt that cannot be managed the best  solution is to file a Chapter 7 bankruptcy. There are, however,  situations where filing a Chapter 7 is not possible or is not in a  person’s best interest: filing a Chapter 13 is the best path for you.

This  article is only a guide and not legal advice. When the reader wants to  know and understand their options they should always consult with a law  firm that is experienced in bankruptcy law. We, of course, hope you give  us a call. Our consultations are always Complimentary and confidential.

WHEN A CHAPTER 13 IS THE BEST PATH RATHER THAN A CHAPTER 7

(Below  there are frequent references to dividends to unsecured debts. What  this means is the percentage to unsecured debts: like a 10% dividend  would mean repaying only 10% of what is due)

  1. When an individual has filed a Chapter 7 within the past 8 years. A full article on timing can be found on our website here.
  2. Your  car was repossessed or is in danger of repossession and you want to  keep your car. Then filing a Chapter 13 is the best option.
  3. Foreclosure  or in danger of a foreclosure and you want to save your home. Our FREE  eBook sited above goes into a great detail on the use of our American  Bankruptcy Laws.
  4. Your real estate taxes have been sold  and the expiration of the redemption is coming up. A Chapter 13 allows  you to repay the taxes over a period up to 5 years and you save your  home.
  5. Condominium arrearages. You owe back condo dues and  want to keep your condo. Chapter 13 allows you repay the arrears over  time. A full article can be found at this link.
  6. You  owe IRS debts. While some IRS can be discharged in a Chapter 7; some  cannot. A Chapter 13 allows you to pay the IRS debts that can’t be  discharged in Chapter 7 over a long period of time and the remainder  repaid with a very small dividend. 
  7. High Income earners  can’t get past the Means Test. Even if you can’t get past the Means Test  with all possible deductions you may still be able to file a Chapter 13  paying less than 100%. A full article can be found here.
  8. You  have a second mortgage but the value of your home is less than the  first mortgage balance. In a Chapter 13 filing you can eliminate the  2nd mortgage lien. Our FREE eBook on Saving Your Home listed above has a  full Chapter on the subject or read our article on Eliminating  2nd mortgages at this link.
  9. Parking  tickets, red light tickets, and toll way debts cannot be discharged in a  Chapter 7 but can in a Chapter 13. If your driver’s license has been  suspended for these debts you can get your license back. The dividend to  these debts in Chapter 13 cases is generally very, very low.
  10. Protecting  co-buyers or co-signers. A Chapter 13 plan can be set up so that the  debt to a co-signer or co-buyer will be paid 100% over a period of time  and the remainder to be paid a very, very low dividend.
  11. When  your assets net of liens and exemption is a lot of money a Chapter 7  trustee would sell them for the benefit of creditors a Chapter 13 is  most likely the way to go. Typical examples of this are a home with a  lot of equity; a high valued car with no liens; or, a pending Personal  Injury case (whether a law suit has been or not). Our firm does a lot of  work using a liquidation analysis that frequently demonstrates that the  client can repay unsecured debts with a dividend of much less than  100%.
  12. There are debts that cannot be discharge in a  Chapter 7 but can be repaid over a period of time in a Chapter 13 with  the remaining unsecured being paid with a small dividend.

For more information on Chapter 7 vs Chapter 13, a Complimentary consultation is your next best step. Get the information and legal answers you are seeking by calling today.

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