Is Chapter 13 Or Chapter 7 The Best Bankruptcy Option?

Chap 13 presents individuals a number of advantages over liquidation under Chap 7

. Perhaps most markedly, chapter 13 bankruptcy presents people the opportunity to protect their homes from foreclosure. By filing under this chapter, men and women can halt foreclosure proceedings and may cure delinquent mortgage payments over time.

However, they will have to still make all mortgage payments that come due during the chapter 13 plan punctually. One more plus of bankruptcy filed under chapter 13 is that it allows consumers to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the ch 13 plan. Doing this may lower the payments.

Bankruptcy filed under Chapter 13 also has a specific provision that safeguards third parties who are accountable to the debtor on "consumer debts." This provision may possibly shield co-signers. Finally, chapter 13 bankruptcy acts like a consolidation loan under which the individual makes the plan payments to a chap 13 trustee who then directs payments to creditors. People will have no immediate contact with creditors while under ch 13 protection.

Almost any person, even if self-employed or operating an unincorporated business, is a candidate for chapter 13 bankruptcy help as long as the person's unsecured debts are less than $360,475 and secured debts are less than $1,081,400. These sums are altered regularly to mirror changes in the consumer price index. A corporation or partnership may not be a chap 13 debtor.

Individuals can't file under chap 13 or any other chapter if, during the former 180 days, a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or conform with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover assets upon which they hold liens. Moreover, no individual may be a debtor under chap 13 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an accepted credit counseling agency either in an individual or group briefing. There are exceptions in emergency situations or where the U.S. trustee (or bankruptcy administrator) has established that there are not enough authorized agencies to offer the needed counseling. If a debt management plan is formulated while in required credit counseling, it will have to be filed with the court.

by: Bill Rogers.

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