Why would I choose to file a Chapter 13 bankruptcy instead of a Chapter 7?

If you’ve been struggling to pay bills on time, beginning to fall behind or have been behind for a sustained period of time, you might be considering filing for bankruptcy.

The single most common reason to file a Chapter 13 instead of filing a Chapter 7 is that you own an asset that you want to protect.  Most commonly, that asset is a substantial amount of equity in the home that cannot be protected in a Chapter 7.

Filing a Chapter 13 – which allow individuals with regular sources of income to set up plans to make installment payments to creditors over three to five years – has several benefits.  Here are some:

  • Halts all debt collectors
  • Stops the foreclosure process
  • Keeps you in your home (although you still need to make your mortgage payments)
  • Can buy you time to request a loan modification from your mortgage company
  • Pays off accumulated debt (often at a fraction of what is owed on paper)
  • Can take up to 60 months, depending on the length of the repayment plan, to have debts completely discharged

If you’re thinking about filing a bankruptcy petition, or have questions about the process, please call Winslow & McCurry, PLLC at (804) 423-1382.