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The Top 11 Reasons to File for Chapter 13 Bankruptcy


1. First and foremost, you have the benefit of invoking the automatic stay. However, in this case, you amend, convert, or dismiss your 13, unlike a 7. Once you file a 7, you are in it for the duration.

2. You control all of the consumer claims in the Chapter 13; you have standing to object to claims and filed adversary proceedings; you can pursue all claims arising during the case, such as automatic stay violations; and you have a venue for filing all dischargeability proceedings.

3. If you want to keep your car, you can modify and reamortize a high-interest loan. If the loan is more than two and a half years old, you can "cram down" the claim to the value of the car.

4. You are dealing with a Chapter 13 Trustee who wants your business rather than a Chapter 7 Trustee who is fly specking your statements looking for assets and claims that they can liquidate.

5. You can continue to contribute to your pension and repay your pension loans in a Chapter 13 and those payments are not included in your disposable income until they are repaid.

6. You are subject to less scrutiny by the United States Trustee because you are doing exactly what Congress said should be done to file for Chapter 13.

7. The automatic stay in Chapter 13 is in effect during the entire duration of the plan (three to five years), so you have a better opportunity to reorganize your affairs. If you have problematic claims, especially private student loans that you cannot repay, you can be in a Chapter 13 forever and remain protected by the automatic stay.

8. If you have co-obligors (co-signers) with any loans, including student loans, the non-filing party is protected by the automatic stay.

9. You can cure mortgage arrears in a Chapter 13 plan. You may have a new cause of action for misapplication of payments or improper fees and charges against the mortgage servicers upon discharge per 524(i). Since there is no ability for the mortgage servicers to comply with this new statutory mandate, you will have a new post-discharge cause of action in every Chapter 13 case with a residential mortgage.

10. You have the ability to draft a plan that includes terms and conditions which become part of the confirmed plan if the creditors do not object.

11. You can propose a Chapter 13 plan with a 0% percent payback to unsecured creditors. The Chapter 13 plan can be used to pay the administrative expenses, the secured debts for property you want to keep, and any priority claims (non-dischargeable income and employer taxes and domestic support obligations).