Chapter 13 Bankruptcy: Why Chapter 13 may be your best choice

When people think of bankruptcy, they often imagine their financial slate being wiped clean. However, not all bankruptcy filings eliminate all of your debt.

A qualified Ohio bankruptcy attorney can evaluate your situation and help you understand which type of bankruptcy might be right for you, but here are some general reasons why you might choose to file for Chapter 13 rather than Chapter 7.

If you owe money that is not dischargeable in Chapter 7…

Certain kinds of debt cannot be eliminated through bankruptcy. This often includes taxes, child support, or money you may owe a former spouse based on a divorce settlement. If these are the biggest portion of your debt, then Chapter 13 restructuring may be the only way to get debt relief.

If you have liens on your house or car that are more than what the property is worth…

A lien against a piece of property states that if the property is sold, the lienholder (your creditor) gets to take a portion of the sale price first. If the amount of the liens total more than the property is worth, then even if you sell the property, you still owe money. Under Chapter 13, portions of the lien that are more than what the property is worth can be defined as “unsecured” and you may have to pay little or nothing against them. So, if your home is currently worth $150,000 but you owe $200,000 on the mortgage, you could have $50,000 of the lien eliminated under a Chapter 13 restructuring, although you’d still have to pay the $150,000 in full.

If you’re late with your house or car payments and want to keep it…

In Chapter 7 bankruptcy, you might be required to sell your house or car to cover the debt that you owe. This depends on several factors, and your attorney can help you evaluate if this applies to you. However, if you want to keep your home or car and it makes sense for you to do so, Chapter 13 may be the best way to allow that to happen.

You have more assets than the exemptions allow…

The Bankruptcy Code provides certain exemptions that are protected from being taken from you in the bankruptcy process. Most people who file Chapter 7 are “no-asset” cases, meaning that the things that they own are covered by exemptions and don’t need to be considered when determining how to pay back creditors. Many people who have assets of some kind choose to file Chapter 13 because it can help them keep their house, car, and other personal property.

Are you confused?

You’re not alone. Many people try to file for bankruptcy on their own only to get caught in the many legal technicalities and end up paying more against their debts than necessary or losing valuable personal property that they could have kept. Before filing Chapter 13, consult with a qualified bankruptcy attorney to ensure that you take advantage of the maximum legal protections available. To schedule a free consultation with a Columbus Bankruptcy Attorney, call 614-934-1544 or contact us today.