At a casual glance, a Chapter 7 bankruptcy probably seems much better than a Chapter 13 bankruptcy. After all, it is fast and does not require that you keep making payments to your credit card companies and other creditors.
However, Chapter 13 bankruptcy is popular for a reason. It offers many benefits to individuals who need help managing their debt. What are some of the top reasons people choose a Chapter 13 bankruptcy?
They earn too much for Chapter 7
Perhaps the top reason that people start considering Chapter 13 bankruptcy is that after adjusting their income for the means test, they discovered that they earned too much. If your income is too high to qualify for Chapter 7 bankruptcy, then Chapter 13 can still give you an opportunity to gain control over your finances.
They have property to protect
People call Chapter 7 bankruptcy liquidation proceedings for a reason. If you have property that you cannot exempt under the law, then it is subject to liquidation or sale to repay your creditors. When you have more than you can exempt, Chapter 13 bankruptcy is an option that does not place limits on your personal holdings.
They feel comfortable with bankruptcy
For some people, making an earnest attempt to repay their creditors is a matter of honor. While there is nothing unethical about seeking bankruptcy protection, an internal sense of obligation can stop some people from filing.
If your concern about repayment is what has prevented you from filing thus far, Chapter 13 can be a compromise that allows partial repayment while still granting you an automatic stay and better control over your monthly budget.
Learning more about the different kinds of bankruptcy can help you decide if a Chapter 13 filing is the right choice for you.