Why Would Someone File Chapter 13 Instead Of Chapter 7?
If you compare Chapter 7 bankruptcy to Chapter 13, you might instantly assume that Chapter 7 is the best option, as it offers a way to totally eliminate credit card debts. While Chapter 7 is beneficial in many situations, it is not always the best option, nor is it always even an option people could use. Here are some of the top reasons people file Chapter 13 instead of Chapter 7, and this will help you understand why Chapter 7 is not always the best choice.
Chapter 13 helps you save your house
When a person is facing foreclosure of their home, he or she may have no other way to save the house except for filing Chapter 13. Chapter 13 will allow you an opportunity to stop the foreclosure process and save your home, whereas Chapter 7 does not offer this. If you missed a couple of house payments and are facing foreclosure or worried that your lender will initiate the process, this is an option you have to stop the process from causing you to lose your home. The same is true for repossession of cars as well. If you think your lender will repossess your car, filing for Chapter 13 will put this to a stop.
Chapter 13 gives you time to catch up on debts
The second reason people choose Chapter 13 is to have extra time to pay off debts that could not be included in a Chapter 7 discharge. For example, if a person owes a lot of back taxes, filing for Chapter 13 would give the person time to repay this debt. The same is true for money owed for alimony, child support, or any other type of debt. If you need extra time to repay your debts, Chapter 7 would not help you out a lot.
Chapter 7 is not an option
The other reason some people choose Chapter 13 is when they do not qualify for Chapter 7. If you fail the means test, you will not be able to use Chapter 7. If you want relief from your debts, you could use Chapter 13 instead.
These are three of the most common reasons people choose Chapter 13 over Chapter 7. If you are wondering which is the best option for you, talk to a bankruptcy lawyer. Bankruptcy lawyers like the ones at Haven Law Group, P.C. know the law and can help you determine what route to take.