If You're Thinking Bankruptcy, Chapter 13 May Be The Best Option

chapter 13 bankruptcy


By:Mike Cibik


If You’re Thinking Bankruptcy, Chapter 13 May Be The Best Option


Our personal finances generally do not stay in the same shape for a long time. It’s majorly because the circumstances change, usually without notifying. If a financial crisis hits your business, you would prioritize to overcome it with a strategic plan. But when bankruptcy hits, you may require more attention to tackle it. There are basically two categories of bankruptcy cases filed by people when they are willing to come out of debt: Chapter 7 and Chapter 13.


  • In case, you are required to file for personal bankruptcy, make Chapter 13 your first preference whenever feasible. Chapter 7 is seemingly less complicated as it involves merely a few months in the court proceedings and a faster exit to a debt-free life. 
  • Chapter 13 seems to be more complicated as it has repayment plans that last from 3-5 years before one can claim complete liberty from debt. 
  • Usually, a majority of the people who need to file for bankruptcy prefer Chapter 7 as it is less time consuming and less expensive. However, if you dig a little deeper into the entire process of debt-relief, you may find Chapter 7 being a less attractive option due to the following reasons: 
    1. Chapter 13 offers a restructured payment plan and spread the payment terms over a 3-to-5 year period. This also allows you to continue working, and pay your debts. 
    2. The major difference between Chapter 13 and Chapter 7 is that Chapter 13 allows you to retain your assets. This is known as the ‘wage earners plan’ since you require to earn income to be eligible. Another benefit is that Chapter 13 can protect all the co-signers too if you have any, on your loans. 
    3. Chapter 13 stops the process of foreclosure against your home. This type of debt relief helps you in retaining the ownership of your house. Chapter 13 also allows you to repay your debts in portions in exchange for keeping all your assets. What a relief, isn’t it? 
    4. While Chapter 7 continues to show on your credit record for a complete decade, Chapter 13 bankruptcy will only appear on your credit record for 7 years.
    5. After filing for bankruptcy, if you incur additional debt due to job loss or illness, Chapter 13 allows you to dismiss and refile your case including the fresh debt. 
    6. One of the major advantages of Chapter 13 bankruptcy lawsuit is that you can repay your creditors basis your income and assets value. This means that your repayment option can be as low as $150/month or even less. 
    7. A chapter 13 bankruptcy case allows you to freely dismiss the case if required. You may get in touch with an experienced bankruptcy attorney and get your repayment plan modified if there is a change in your financial situations. This clearly indicates that you completely are in control of your life. 
    8. Chapter 13 bankruptcy is a better bankruptcy option in case you require lowering the interest rate on your automobile loan. This suggests that you can possibly reduce the monthly expenses on your car without giving away the vehicle. 
    9. Wipe Out Underwater Second Mortgages In Chapter 13.  If you own real estate and are upside down on your second mortgage, you may be able to eliminate it by filing for Chapter 13 bankruptcy. 
    10. If you are liable to pay tax debts to the government, you can spread your payment over 3 to 5 years without paying any extra penalties or interest. Thus, Chapter 13 saves you huge money you owe to the government. 
    11. Though your bankruptcy attorney may charge higher fees for Chapter 13 bankruptcy case, however, you may pay the fees through an agreed repayment plan. While in case of chapter 7 bankruptcy, you need to pay the entire fees in advance before the case is filed.


Bankruptcy can leave you devastated, but the best step is to come out of it by consulting an experienced bankruptcy attorney. Chapter 7 bankruptcy certainly looks attractive, if you desire immediate solutions to your financial problems.


However, if you don’t want an absolute liquidation of all the assets you possess, Chapter 13 bankruptcy is the best bankruptcy options. Consulting an experienced bankruptcy attorney who understands your case and personal bankruptcy on time will help you in the long run.

If you’re confused about which Chapter to file for, the Law Offices of Cibik & Cataldo can help you! Contact our expert bankruptcy attorneys at 215-735-1060 and get all your questions answered.


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