3 Reasons A Lawyer Might Recommend Chapter 13 Bankruptcy Instead Of Chapter 7

8 June 2016
 Categories: , Blog


Many people would rather file Chapter 7 bankruptcy rather than Chapter 13, but what should you do if you are eligible for either type? In this situation, a bankruptcy lawyer could help you choose the right option for your situation, and you should not be surprised if the lawyer recommends using Chapter 13. Here are three reasons your lawyer might suggest this option.

You will not have to liquidate

In Chapter 7, you can instantly eliminate any unsecured debts you have, but there is a cost for this. The cost is often the liquidation of your assets. If you have any assets that are valuable, the court has the right to seize them from you to sell them. The court does this to pay off as much of your debt as possible.

This is not something you have to worry about with Chapter 13. With Chapter 13, the court will not seize your assets; however, you are not likely to get debts discharged like you would through a Chapter 7 filing.

You can keep your home

The second reason your lawyer might suggest Chapter 13 relates to your home. If you are about to lose your home through foreclosure, Chapter 13 will stop this from happening. While Chapter 7 can temporarily stop this from occurring, there will be a good chance you may end up losing it throughout the bankruptcy case, especially if you have a lot of equity in it.

Your debts are primarily priority debts

The other reason Chapter 13 might be better for you is if most of the debts you have are considered priority debts. Priority debts are those that cannot be discharged through Chapter 7, and they are the type that must be paid in full no matter what. Child support is a perfect example of this, but there are other types of priority debts too, including student loans and back taxes.

If these are the types of debts you have, choosing to file Chapter 13 would allow you to catch up on the debts through a repayment plan. There is no repayment plan in Chapter 7, so filing for Chapter 7 would not be extremely helpful for your situation.

Filing bankruptcy is a big step to take, and you will want to make sure you choose the right branch. To learn more about this, make an appointment with a bankruptcy attorney in your city today.