Advantages of Chapter 13 over Chapter 7

Although Chapter 7 is by far the most popular option for filing bankruptcy, in that it completely eliminates all of your dischargeable debt, filing for Chapter 13 bankruptcy can have advantages for debtors that may not be available under Chapter 7 bankruptcy.  More specifically, Chapter 13 can stop foreclosure, allow you to catch up on late mortgage payments, permit you to keep your property, and protect your co-signers.

Chapter 13 Can Stop Foreclosure

One of the biggest advantages of filing Chapter 13 bankruptcy is your ability to stop foreclosure proceedings, and allow you to catch up on late mortgage payments.  A Chapter 13 bankruptcy plan can stop foreclosure, in that it permits you to repay any delinquent payments over a three to five year period, as well as pay the monthly mortgage payments as they become due.

Keep Your Property Under Chapter 13

So long as you remain current on your monthly mortgage payments during the term of the plan, you will avoid foreclosure.  Therefore, the ability to keep your property under Chapter 13 bankruptcy proceedings often causes debtors to choose Chapter 13 over Chapter 7 bankruptcy proceedings.

Co-Signers Are Protected Under Chapter 13

If another party, such as a parent or sibling, has co-signed your mortgage loan, or any other secured debt that has now become delinquent, Chapter 13 bankruptcy prohibits creditors from pursuing your co-signer for the duration of your bankruptcy proceedings.  In contrast, Chapter 7 bankruptcy proceedings do not offer the same protection to your co-signer.  Therefore, the fact that co-signers are protected under Chapter 13 is a distinct advantage to filing Chapter 13 bankruptcy.

When to Talk to an Attorney

Whether you are considering filing Chapter 7 or Chapter 13 bankruptcy proceedings, you should contact an experienced bankruptcy attorney for assistance regarding your situation.  A bankruptcy attorney can provide you with all available options for managing your debts, as well help you to choose the alternative that is best for you and your family.