Benefits of Filing Chapter 13 Instead of Chapter 7

Chapter 7 bankruptcy and Chapter 13 bankruptcy are the two most common types people file in Florida. A Chapter 7 bankruptcy will discharge most or all of your debt but you are limited in how much property you can keep and you must pass the means test to qualify. Chapter 13 restructures the debt it into a repayment plan where you may pay a portion or all of the debt over time.

Due to the fact that most people want their debt discharged after bankruptcy, they often first opt for Chapter 7 bankruptcy. However, there are many benefits that come with filing Chapter 13 bankruptcy instead. Below, our Tampa Chapter 13 bankruptcy attorney explains what these are.

More Affordable Upfront Costs

People who are considering bankruptcy cannot typically incur further fees. A Chapter 13 bankruptcy is more expensive overall, as you will have to repay the majority of your debt. However, the costs you pay upfront are less costly and so, you may be able to save money.

Avoid the Means Test

The means test was established decades ago to prevent abuse of the bankruptcy system. The test considers your income and expenses to determine if you have the means to repay your debt. If you do not pass the means test, you have no choice but to file Chapter 13 or chapter 11.

More Affordable Payments

The main purpose of Chapter 13 bankruptcy is to reorganize your debt into a repayment plan. This may sound like a drawback to Chapter 13 because you have to repay the debt, but it is not. Chapter 13 repayment plans extend between three and five years. It is also often possible to reduce the  amount of the total debt owed, meaning it is more affordable to repay.  Chapter 13 also can sometimes allow you to keep vehicles while reducing the debt and/or the interest rate on the vehicles and pay them through the bankruptcy.

Keep Your Property

Chapter 7 is also known as a liquidation bankruptcy because some of the borrower’s property might be sold to try and recover the debt. It is possible to file Chapter 7 and not lose any property,  but in chapter 13 you usually can keep property you would otherwise lose in chapter 7. You are still repaying the debt and so, there is no need to sell your property.

Stop Foreclosure

A Chapter 7 bankruptcy case can delay foreclosure proceedings on your home if you are behind on your mortgage payments. However,  it cannot stop them entirely.  A Chapter 13 bankruptcy, on the other hand, may help you keep your home. Your past due mortgage payments can be distributed in the repayment plan. It is important to keep in mind that you will have to be able to repay your past mortgage payments over a 3-5 year period, as well as your current payments through the chapter 13 repayment plan.

 Our Chapter 13 Bankruptcy Attorney in Tampa Can Help Decide Which Type is Right for You

If you are struggling with debt, it is important to choose the type of bankruptcy that is right for you. At Florida Law Advisers, P.A., our Tampa Chapter 13 bankruptcy attorney can review the facts of your case, determine which type is right for you, and guide you through the process. Call us now at 1 (800) 990-7763 or contact us online to schedule a consultation and to learn more about how we can help with your case.

Source:

uscourts.gov/court-programs/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics