The Benefits of Chapter 13 Bankruptcy

There's no one "right solution" when it comes to serious financial difficulties. Whether filing bankruptcy under Chapter 7 or Chapter 13 or going with another alternative outside the bankruptcy process is the best fit depends upon the debtor, the circumstances, the amount and nature of the debt, current income, and a variety of other factors. Often, people find Chapter 13 bankruptcy helpful when:

• They are behind on payments on secured property that they want to keep. Many people file Chapter 13 bankruptcy petitions specifically to stop foreclosure or vehicle repossession, but Chapter 13 may be equally useful for catching up on other secured debts while keeping the property that secures the debt.
• They have tax debts that cannot be discharged in a Chapter 7 bankruptcy case. Certain tax debts are non-dischargeable, but may be included in a Chapter 13 repayment plan and paid over time.
• They have non-exempt property that they want to keep. In a Chapter 7 bankruptcy case, non-exempt property can be liquidated (sold) for the benefit of creditors, but in a Chapter 13 repayment plan, the debtor maintains his or her property while making scheduled payments.
• They have filed for Chapter 7 bankruptcy within the previous eight years, and thus are not eligible to file under Chapter 7.
• They wish to protect co-signers on certain debts. In a Chapter 7 bankruptcy case, a non-filing co-signer remains liable for a debt even if that debt has been discharged as to the primary debtor. However, if a debt is included in a Chapter 13 repayment plan, the co-signer is protected so long as the debtor complies with the plan.
• They have past-due student loan debt. Student loans are not dischargeable in a Chapter 7 bankruptcy case except under certain very narrow circumstances, but student loan debt may be included in a Chapter 13 repayment plan.