Chapter 13

There are many reasons why you may choose to file a Chapter 13 case, rather than Chapter 7. A Chapter 13 is a payment plan bankruptcy, but it often doesn’t require you to pay back all of your debts. Often it allows you to pay only the debts you would pay anyway, such as your house, car and recent taxes. Here are some instances why you may choose Chapter 13:

1. You filed a Chapter 7 within the last 8 years and received a discharge of your debt. You can’t receive another Chapter 7 discharge unless you wait more than 8 years to file again, but you can receive a Chapter 13 discharge by waiting more than 4 years.
2. Your family income may be too high to qualify for Chapter 7. Although the calculation is based on the average income for your family size, your income may not allow you to successfully conclude a Chapter 7. A Chapter 13 has no income limit, but a high income may require you to pay some or all of the debt that would be eliminated in Chapter 7.
3. Only Chapter 13 will stop a foreclosure on your home and give you up to 5 years to catch up on your mortgage payments.
4. Only Chapter 13 may eliminate a second mortgage on your home, as long as your home is worth less than the balance owed on the first mortgage.
5. Only Chapter 13 may stop interest on taxes owed to the IRS and other taxing authorities, and require that they accept a payment plan of up to 5 years.