Part 1—Chapter 13 Basics
Part 3—How Your Plan Payment is Calculated
Part 4—The Chapter 13 Process
There are many benefits of Chapter 13 bankruptcy versus a Chapter 7. A few of them are obvious, but some are a little more hidden. Here are a few:
You get to keep your stuff
In Chapter 13, you don’t have to worry about losing your car to pay your creditors. Instead of giving up your stuff, Chapter 13 allows you to keep everything as long as you’re paying enough to your creditors.
You can stop foreclosure permanently
Both Chapter 7 and 13 bankruptcy allow you to pause the foreclosure process. In Chapter 7, however, once the bankruptcy is done the mortgage company can go right back to foreclosing. In Chapter 13, you can take mortgage arrears and spread them out over a three to five year period. As long as you can pay your mortgage arrears back over this time, you can stop the foreclosure permanently.
You can deal with tax debt, mortgage debt, and domestic support in flexible ways
Chapter 13 helps people deal with delinquent tax debt, mortgage debt, and past-due child support or alimony by allowing the filer to pay the debt over a longer period of time and get out of default immediately. Once the Chapter 13 is over, those debts will be paid in full.
It hurts your credit score less
Chapter 13 bankruptcy stays on your credit report for seven years, rather than the ten years a Chapter 7 stays on your record. Also, Chapter 13 has less negative impact while it’s on your credit report, because you’re paying part of your debt back instead of wiping it all out.
Attorney fees are more flexible
In Chapter 7, you’ll need to pay the entire attorney fee up front before filing. In Chapter 13, the majority of your attorney fee is taken out of your monthly payment. This means in a lot of cases, you pay very little before filing and the rest of your attorney fees is come out of your creditors’ pockets.
Part 1—Chapter 13 Basics
Part 3—Stopping foreclosure in Chapter 13
Part 4—The Chapter 13 Process