Chapter 13 Bankruptcy Benefits

Most debtors considering bankruptcy prefer a Chapter 7 bankruptcy so that they can discharge unsecured debt and quickly conclude their case. However, sometimes filing a Chapter 13 bankruptcy yields results not possible in a Chapter 7 bankruptcy.

Benefits of filing Chapter 13 bankruptcy:

  1. Chapter 13 bankruptcy allows debtors more flexibility than Chapter 7 bankruptcy. A Chapter 13 bankruptcy debtor can dismiss their case at anytime and they have the option of converting the case to a Chapter 7 bankruptcy, if necessary.
  2. A Chapter 13 bankruptcy debtor can modify their repayment plan if their financial situation changes and they even have the option of selling or refinancing their home while in bankruptcy.
  3. If a Chapter 13 bankruptcy debtor is in disagreement about the charges added to their delinquent mortgage they have the right to challenge the lender. Also, they may be able to discharge unsecured debt attached to their mortgage in Chapter 13 bankruptcy. In other words, upside down homeowners may be able to discharge a second mortgage which is not secured by the value of their home.
  4. Speaking of discharging unsecured debt, if a debtor has a vehicle which is worth less than the loan attached to it, they may be able to reduce the amount of the loan making it match the true value of the car.
  5. Chapter 13 bankruptcy frees the debtor from making lump sum payments. The bankruptcy debtor in this chapter can repay attorney’s fees and even delinquent loan amounts over the course of their bankruptcy repayment plan.