4 Reasons Why You Might Want Choose Chapter 13 Over Chapter 7 Bankruptcy

bankruptcy-signWhy on Earth would anyone want to file a 13 when a 7 gets rid of ALL the debt? Sometimes, a debtor does not qualify for a 7. Ever since the federal government re-wrote the bankruptcy laws in 2005, it is tougher to qualify for a 7 than it used to be. If your income exceeds a certain level, the court will not permit you to file a 7. This makes your decision easier.

You either file a 13 or do not file. But sometimes someone does qualify for a 7, but a 13 is still a better option. Here are some examples of where a 13 makes more sense to file than a 7:

1. Filing a 7 will often result in forfeiture of assets If a debtor has a lot of assets (paid off vehicles, stocks, bonds, collectibles),
filing a 7 will often result in forfeiture of those assets. A 13 repayment plan may very well allow the debtor to get rid of his/her debt but keep those assets.

2. A 13 can potentially get rid of a 2nd mortgage ONLY in a 13 can a debtor potentially get rid of his/her 2nd mortgage on a primary residence. Be sure to ask a qualified bankruptcy attorney whether you meet the requirements to have your 2nd mortgage stripped off of your home.

3. Can help you keep your home or car If a debtor has fallen behind in his/her mortgage or car payments, a 13 plan can get them caught up and help them keep their home or car. If you file a 7 while behind on your mortgage or car payments, the creditor can immediately file suit to take the home or car back.

4. A federal judge can lower your interest rate A federal judge can lower an interest rate on a car loan in a 13, but not a 7. If you have a car loan with a high interest rate, and you really want to keep the car, a 13 might be the way to go.

As you can see, the issue is not black and white. There is a lot of gray area that needs to be considered. At the Berkowitz & Myer, we can guide you through the bankruptcy process and help you determine what type of bankruptcy, if any at all, is best for you.

Attorneys are one of those things in life you hope you never need, but when you do you should make sure you select the right one and Berkowitz & Myer is the right one.

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