Reasons for Filing Chapter 13 Bankruptcy


In most situations, a Chapter 7 Bankruptcy has advantages over a Chapter 13 Bankruptcy, but not always. In addition, sometimes a debtor does not qualify for a Chapter 7 Bankruptcy which means that Chapter 13 Bankruptcy is the next best alternative for dealing with creditors.

Following are some of the reasons a Chapter 13 Bankruptcy may apply:

  • You are behind in paying your home loan or car loan but are able to make up the delinquent payments over five or less years. You cannot do this under a Chapter 7 Bankruptcy.

  • You own valuable non-exempt property that you would be required to give up under a Chapter 7 Bankruptcy.

  • You received a Chapter 7 Bankruptcy discharge within the previous eight years and thus, you are not eligible under Chapter 7.

  • You received a Chapter 13 Bankruptcy discharge within the previous six years and thus, you are not eligible under Chapter 7.

  • You need help paying your debts now, but want to keep the option of filing for Chapter 7 Bankruptcy in the future.

  • You have a desire to repay all of your debts (including those dischargeable under Chapter 7 Bankruptcy but need more time.

  • You have student loans, tax obligations, unpaid child or spousal support, or other debts that are not dischargeable under Chapter 7, but require up to five years to pay them.

  • Your income is too high for you to qualify for Chapter 7 Bankruptcy under the Means Test.

  • You have a codebtor on a personal debt. Under Chapter 13 Bankruptcy, the creditor will not take collection action against the codebtor as long as you keep the payments on your Chapter 13 plan current. Under Chapter 7, the creditor will look to the codebtor for payment.

  • You have assets that can be sold under an orderly liquidation plan to retire your debt.


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