Chapter
13 Bankruptcy is also known as a
reorganization bankruptcy. Chapter13
bankruptcy is filed by individuals
who want to pay off their debts over
a period of three to five years.
This type of bankruptcy appeals to
individuals who have non-exempt
property that they want to keep. It
is also only an option for
individuals who have predictable
income and whose income is
sufficient to pay their reasonable
expenses with some amount left over
to pay off their debts.
There are many reasons why people
choose Chapter 13 bankruptcy instead
of Chapter 7 bankruptcy. Below are
some of the situations that might
apply...
You have a sincere
desire to repay your
debts, but you need the
protection of the
bankruptcy court to do
so. You may think filing
Chapter 13 bankruptcy is
simply the "Right Thing
To Do" rather than file
Chapter 7.
You are behind on your
mortgage or car loan,
and want to make up the
missed payments over
time and reinstate the
original agreement. You
cannot do this in
Chapter 7 bankruptcy.
You can make up missed
payments only in Chapter
13 bankruptcy.
You need help repaying
your debts now, but need
to leave open the option
of filing for Chapter 7
bankruptcy in the
future. This would be
the case if for some
reason you can't stop
incurring new debt.
You are a family farmer
who wants to pay off
your debts, but you do
not qualify for a
Chapter 12 family
farming bankruptcy
because you have a large
debt unrelated to
farming.
You have valuable
nonexempt property. When
you file for Chapter 7
bankruptcy, you get to
keep certain property,
called exempt. If you
have a lot of nonexempt
property (which you'd
have to give up if you
file a Chapter 7
bankruptcy), Chapter 13
bankruptcy may be the
better option.
You received a Chapter 7
discharge within the
previous six years. You
cannot file for Chapter
7 again until the six
years are up.
