When is Chapter 13 More Advantageous Than Chapter 7?

  • Bankruptcy

When is Chapter 13 More Advantageous Than Chapter 7?

The common tendency of bankruptcy filers is to believe that Chapter 7 is better than Chapter 13. Yes, Chapter 7 has many benefits, but it can outrightly not be regarded as the best alternative compared to Chapter 13. There are many scenarios when Chapter 13 can prove more advantageous than Chapter 7. Every bankruptcy chapter has some or the other benefits and flaws. To learn more about all the Chapters and their technicalities log on to Recovery Law Group. Some of the Chapter 13 benefits over Chapter 7 can be listed as follows-

  • When you are not eligible for Chapter 7

If you fail to be eligible for Chapter 7, well the only option available could be Chapter 13. In that scenario, Chapter 13 is beneficial. In other words, it is easier to qualify for Chapter 13 than Chapter 7. There is a median test as well as a means test to be eligible for Chapter 13. The calculation can become slightly intriguing but the straightforward debt thresholds for Chapter 13 make it a lot easier to determine if you qualify for Chapter 13 or not.

  • Safeguarding your car and other important assets

Even if you are eligible for Chapter 7 after undergoing the complicated calculations, applying through Chapter 13 might still be a better option. If you are running behind the payment schedules of your car mortgage, you get to keep your car as well accommodate the payment of the arrears in the proposed payment plan over the next three to five years.

  • Managing the priority and non-releasable debts

If you have a larger portion of debts that cannot be released, Chapter 13 is the right option for you. Child support, alimony, tax debts, etc., are a few examples of non-releasable debts. If your debt constitutes of a good portion of these debts, then Chapter 13 is a very good option. You get sufficient time period of 3-5 years to pay off these non-releasable debts, while you end up without assets as well as liable to these non-releasable debts with Chapter 7 bankruptcy code Dallas.

  • Time is all that you need

Sometimes, people come across a stage when nothing is working well for them and it is usually all about time. A relaxed phase of 2-3 months can put you back on track with your finances and help you pay off all your dues. This time is very difficult to get especially when you are falling behind several payments across lenders. If you have a steady flow of income and time is all you need to pay off your debts, Chapter 13 can help you close most your debts as well keep all your assets intact. This is possible due to a phenomenon called ‘automatic stay’ which is applied as soon as you apply for bankruptcy. Some salient features of ‘automatic stay’ can be listed as follows-

  1. The lender cannot garnish your wages, or withdraw your cheque, funds from the bank account or make such request to your bank
  2. The creditor cannot repossess your secured loan assets like a car or jewelry, or any other asset kept as collateral
  3. The lender cannot foreclose a home mortgage either
  4. The creditor cannot initiate any suit against you for defaulting payments

 

  • If your tally of a nonexempt asset includes an asset you had like to keep

If you have a nonexempt asset which shall be liquidated during the course of Chapter 7 bankruptcy procedure, Chapter 13 becomes an obvious choice to safeguard your asset as none of the assets are repossessed or liquidated under the Chapter 13 bankruptcy.

  • To relieve you co-debtor

If there is any guarantor for any of your debts, the co-signer or co-debtor can have all the possible troubles of recovery with Chapter 7 bankruptcy. The filer is safe, but the guarantor or co-debtor isn’t. The lenders will go after the guarantor to recover as much of dues as possible. This could be very disturbing for the co-debtor. With Chapter 13, there is no such hook on the co-debtor since you have proposed to payout most of the debts in the next 3-5 years.

To know more about Chapter 13 and Chapter 7 technicalities, formalities, applying details and to discuss what is best in your case, call us now at 888-297-6203.


2019-08-02T08:02:51+00:00