Who Should File For Chapter 13 Bankruptcy?
Given a choice between chapter 7 and chapter 13 bankruptcy, most people choose to file under chapter 7, and of those that do file under chapter 13, most do not successfully complete their repayment plan.
However, there are some situations which make it favorable to file under chapter 13, such as having significant debts which can not be discharged under chapter 7 bankruptcy.
Rules Governing Chapter 13 Bankruptcy Under BAPCPA The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 forces many who would previously have filed for chapter 7 bankruptcy to file for chapter 13 bankruptcy.
Under this law, those whose average monthly income is above the median for their household size in their state must pass the Bankruptcy Means Test in order to file under chapter 7, and those who cannot meet the requirements of the test must file under chapter 13.
Of course, since people who file for bankruptcy generally fall below the median income level, this law will not impose chapter 13 filings on a terribly great number of people.
Mortgage and Car Payments When you have missed car or mortgage payments and wish to eventually restore your original agreement(s) after repaying your debt, chapter 13 bankruptcy is usually the only option which makes this possible.
Additionally, if you are paying for a car which was purchased at least 2 and a half years prior to your bankruptcy filing and wish to keep the car, there are benefits to filing under chapter 13.
This is because you can keep the car by paying only its retail value listed under the bankruptcy filing instead of the actual value remaining on the original contract.
Debts Not Dischargeable Under Chapter 7 Bankruptcy Chapter 7 bankruptcy will immediately discharge many debts, but not all debts can be discharged.
By filing under chapter 13, you will be able to repay many such debts over a period of time, including: - student loans - recent back taxes and unfiled taxes - court judgments - court-imposed fines - back alimony and child support - debts owed due to a civil judgment for injuries or death caused by drunk driving You Wish to Repay Your Debts While many will simply be happy to be freed of the burden of debt, there are some who would not feel right being legally relieved of debt without having to repay the debt; their sense of responsibility for the debts incurred would leave them feeling guilty about this.
Such people may prefer to file under chapter 13 to be able to satisfy their moral obligations while having the protection of the court and being assured their ability to support themselves.
Conclusions The requirement of completing a repayment plan under chapter 13 may seem daunting, and the statistics bear out that most end in failure.
However, we see that there are situations which chapter 13 bankruptcy is much friendlier to than chapter 7 bankruptcy: debts which can be repaid under chapter 13 but not discharged under chapter 7, and the ability to retain your car payment contract and home mortgage being notable examples.
Additionally, it is easier to restore your good credit after completing chapter 13 bankruptcy than a chapter 7 filing.
However, there are some situations which make it favorable to file under chapter 13, such as having significant debts which can not be discharged under chapter 7 bankruptcy.
Rules Governing Chapter 13 Bankruptcy Under BAPCPA The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 forces many who would previously have filed for chapter 7 bankruptcy to file for chapter 13 bankruptcy.
Under this law, those whose average monthly income is above the median for their household size in their state must pass the Bankruptcy Means Test in order to file under chapter 7, and those who cannot meet the requirements of the test must file under chapter 13.
Of course, since people who file for bankruptcy generally fall below the median income level, this law will not impose chapter 13 filings on a terribly great number of people.
Mortgage and Car Payments When you have missed car or mortgage payments and wish to eventually restore your original agreement(s) after repaying your debt, chapter 13 bankruptcy is usually the only option which makes this possible.
Additionally, if you are paying for a car which was purchased at least 2 and a half years prior to your bankruptcy filing and wish to keep the car, there are benefits to filing under chapter 13.
This is because you can keep the car by paying only its retail value listed under the bankruptcy filing instead of the actual value remaining on the original contract.
Debts Not Dischargeable Under Chapter 7 Bankruptcy Chapter 7 bankruptcy will immediately discharge many debts, but not all debts can be discharged.
By filing under chapter 13, you will be able to repay many such debts over a period of time, including: - student loans - recent back taxes and unfiled taxes - court judgments - court-imposed fines - back alimony and child support - debts owed due to a civil judgment for injuries or death caused by drunk driving You Wish to Repay Your Debts While many will simply be happy to be freed of the burden of debt, there are some who would not feel right being legally relieved of debt without having to repay the debt; their sense of responsibility for the debts incurred would leave them feeling guilty about this.
Such people may prefer to file under chapter 13 to be able to satisfy their moral obligations while having the protection of the court and being assured their ability to support themselves.
Conclusions The requirement of completing a repayment plan under chapter 13 may seem daunting, and the statistics bear out that most end in failure.
However, we see that there are situations which chapter 13 bankruptcy is much friendlier to than chapter 7 bankruptcy: debts which can be repaid under chapter 13 but not discharged under chapter 7, and the ability to retain your car payment contract and home mortgage being notable examples.
Additionally, it is easier to restore your good credit after completing chapter 13 bankruptcy than a chapter 7 filing.
