Lucky or Unlucky Chapter 13 Filing

We all know there is a lot of superstition around the number 13. I was thinking about this number last month, during Friday the 13th, when I heard numerous references to this unlucky (or to some, the opposite, and very lucky) day within our calendar.

The number 13 is a significant one in the bankruptcy realm, as it represents Chapter 13 filing. Generally speaking, most debtors prefer to file Chapter 7 because it eliminates most of their debt and is an easier overall process. However, in some cases, repaying debt in a court-approved Chapter 13 repayment plan over a set amount of time can be very beneficial and may prove to be a better option.

Here are some reasons that Chapter 13 may be “lucky” for debtors:

They Can Fulfill Their Financial Obligations – Sometimes people want to repay their debts, but they need a structured payment plan to help them. In Chapter 13, the debtor makes monthly payments over a certain allotted amount of time (36 to 60 months), which allows them to make good on their financial commitments.

They Can Keep Nonexempt Property – In Chapter 7 bankruptcy, the debtor gets to keep only exempt property, which is property that is protected from creditors under state or federal law. In Chapter 13, you don’t lose any property. So, if a debtor has nonexempt property they want to keep, Chapter 13 might be the better choice.

They Can Discharge Some Debts They Can’t Discharge In Chapter 7 – There are certain debts that are only eligible for discharge in Chapter 13 such as: second mortgages, fees from a condominium or homeowners’ association; court fees; etc.

Codebtors Aren’t Liable – Chapter 13 protects codebtors from liability for a joint debt if the creditor receives payment through the repayment plan.

These are just some of the reasons why a Chapter 13 filing could be more beneficial than Chapter 7. However, it may be in an individual’s best interest to file Chapter 7 bankruptcy, as that certainly has its benefits too. Each individual’s needs and circumstances must be taken into consideration. An experienced bankruptcy attorney can assist you making the best decisions for your financial future.