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Reasons for Filing Chapter 13 Bankruptcy
In most situations, a Chapter 7 Bankruptcy has advantages over a Chapter 13
Bankruptcy, but not always. In addition, sometimes a debtor does not qualify
for a Chapter 7 Bankruptcy which means that Chapter 13 Bankruptcy is the
next best alternative for dealing with creditors.
Following are some of the reasons a Chapter 13 Bankruptcy may apply:
- You are behind in paying your home loan or car loan but are able to
make up the delinquent payments over five or less years. You cannot do
this under a Chapter 7 Bankruptcy.
- You own valuable non-exempt property that you would be required to
give up under a Chapter 7 Bankruptcy.
- You received a Chapter 7 Bankruptcy discharge within the previous
eight years and thus, you are not eligible under Chapter 7.
- You received a Chapter 13 Bankruptcy discharge within the previous
six years and thus, you are not eligible under Chapter 7.
- You need help paying your debts now, but want to keep the option of
filing for Chapter 7 Bankruptcy in the future.
- You have a desire to repay all of your debts (including those
dischargeable under Chapter 7 Bankruptcy but need more time.
- You have student loans, tax obligations, unpaid child or spousal
support, or other debts that are not dischargeable under Chapter 7, but
require up to five years to pay them.
- Your income is too high for you to qualify for Chapter 7 Bankruptcy
under the Means Test.
- You have a codebtor on a personal debt. Under Chapter 13 Bankruptcy,
the creditor will not take collection action against the codebtor as
long as you keep the payments on your Chapter 13 plan current. Under
Chapter 7, the creditor will look to the codebtor for payment.
- You have assets that can be sold under an orderly liquidation plan
to retire your debt.
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