Sometimes repaying debt over time in a planned way is more beneficial than selling off your Assets and repaying debt. This comparison will help you understand better.
Chapter 13 is more beneficial if you are under the following circumstances:
1) You don’t qualify for Chapter 7
You have to undergo and pass means test to qualify for Chapter 7. Not everyone can. If a Debtor’s income is high and exceeds the state’s median income, and they have disposable income to repay debt, they might not qualify.
2) Debt repayment is your primary goal
In a chapter 13 bankruptcy, the debtor has to repay the debt over some time to the trustees. If the debtor has a high disposable income, only then can the debtor pay.
3) You don’t want your home to be sold off
If a debtor files for chapter 13, an automatic stay will for once prevent a foreclosure until the repayment plan of the debtor is confirmed. Once it is confirmed, the Debtor will repay all the money, and will permanently stop his home from foreclosure. However, in chapter 7, the Debtor might have to sell his debt to repay the loan.
4) The repossession of your car needs to be stopped at the earliest
If the debtor pays off the debt of the car, they can keep their car. This may not be possible in Chapter 7. The debtor might have to sell his car to repay the loan.
5) If Non-Exempt property is what you wish to keep
In Chapter 7, the trustee sells the non-exempted property of the debtor to pay the creditors with the proceeds. However, in chapter 13, a debtor can keep the non-exempt property if they pay the unsecured creditors an amount that is equal to the value of the non-exempt property.
6) Non-dischargeable debts under chapter 7
Certain debts like marital debts, court fees, student loans, etc cannot be discharged in chapter 7. If you have debts in this category, filing for chapter 13 is better.
Why should you file for chapter 7?
If you face any of the following situations, chapter 7 filing is better.
1) You cannot repay the debt through a repayment plan
If you cannot repay your debt even over some time, chapter 7 is better for you.
2) You need immediate relief from the creditors
In chapter 7, discharge is given within 3 months. After that, a Debtor is free of the creditors.
3) Dischargeable debts
If your debts are mostly dischargeable, chapter 7 will relieve you of your liability.
If you cannot decide whether you should file for chapter 7 or 13, consult an attorney before it is too late. An attorney will not only help guide which is the correct chapter for you but will also help you throughout the entire process. You can also contact Recovery Law Group from Los Angeles & Dallas, TX for the same. Contact – (888-297-6203).