Why would someone file Chapter 13 when they could file a case under Chapter 7 and not have to make payments to a trustee and stay in bankruptcy from three to five years?
Chapter 13 can be an effective way to get caught up on back mortgage payments or back car payments, where Chapter 7 is not helpful. Many people want to pay back as much as they can to their creditors, but they cannot afford to pay everything. Chapter 13 does not necessarily (and most often does not) require a person to pay back 100% of all debts in order to complete a plan and obtain a discharge. A person will pay creditors a certain required amount, which is determined by the means test, ability to pay, and the value of non-exempt property. The remaining, unpaid portions of the creditors’ claims are discharged. Some people have non-exempt property that they would lose if they filed Chapter 7. Chapter 13 allows for the retention of non-exempt property, if the debtor is willing to pay as much to creditors as they would have received if the Chapter 7 trustee had actually sold the asset. Some individuals simply make too much money to file Chapter 7. Chapter 13 is often an effective way to
Related Questions
- Why would someone file Chapter 13 when they could file a case under Chapter 7 and not have to make payments to a trustee and stay in bankruptcy from three to five years?
- I filed a Chapter 7 Bankruptcy case within the last 8 years, but again or still have debt I need help with. Can I file a Chapter 13?
- What is the Difference Between a Chapter 7 and a Chapter 13 Bankruptcy and What Kind of Case Should I File?
