Most people know something about Chapter 7 bankruptcy as it’s usually the chapter they go to talk to an attorney about. After meeting with a Fort Lauderdale bankruptcy attorney, however, they are usually surprised to hear that Chapter 13 is the better chapter to file under for their particular situation. Several considerations could ultimately determine whether Chapter 13 is the best solution for your financial problems. An experienced bankruptcy attorney will be able to help you decide which chapter is best for you.
Sometimes there is no choice in the matter because you don’t qualify for a Chapter 7. To file a chapter 7 bankruptcy, you must “pass’ the means test which means you earn less than the average family of your size in the state you live in. There are other reasons to file a Chapter 13 even if you do qualify for a Chapter 7 bankruptcy.
Some reasons to file Chapter 13 bankruptcy instead of Chapter 7 are:
- You are behind on your mortgage and want to catch up on the payments and keep your house.
- You are behind on your car payments and want to keep your car.
- You have a rental property that is worth more than what it’s worth and you want to cram the mortgage balance down to its current market value while keeping the property.
- You have IRS debt and want to either eliminate it or pay it off without additional penalties and interest. Some IRS debt can be eliminated without payment if certain criteria are met.
- You have assets that you cannot protect in Chapter 7 and you want to keep them.
- You are a business owner and do not want to risk losing your business.
There are many reasons why a Chapter 13 is better than a Chapter 7 but they are all fact-specific.
Chapter 13 Payment Plans
In Chapter 13, you will have to make payments to creditors through the Chapter 13 trustee. Those payments are based on many variables that are determined by your individual circumstances and what you are accomplishing through the plan. However, every Chapter 13 plan proposed to the court must be feasible. That means that you must be able to comfortably afford the payments in addition to your living expenses.
Although most people do not even consider Chapter 13 initially because they fear the monthly payment, Chapter 13 can deliver incredible results depending on your situation. Chapter 13’s are complicated and require the assistance of an experienced Fort Lauderdale bankruptcy attorney.