Chapter 13 Bankruptcy Cases only remain on your Credit Report for 7 Years. Chapter 7 Bankruptcy Cases, on the other hand, stay on your Credit Report for 10 Years. That means Chapter 13 Bankruptcy will get you back to a normal Credit Score more quickly than Chapter 7 Bankruptcy.
Many creditors look more favorably on a Chapter 13 Bankruptcy Discharge because, unlike Chapter 7 Bankruptcy, you do pay something back even if it is a very small amount. Moreover, provided you make your required Chapter 13 Bankruptcy Plan payments, you Credit Score will actually rise while your Chapter 13 Bankruptcy case is pending. In some instances, a person's credit may improve to the point where a lender will agree to loan them enough money to pay off their Chapter 13 Bankruptcy Plan early.
In addition to the Free Financial Management Course, Chapter 13 Bankruptcy requires you, with your Attorney, to create a realistic budget. For many people, this may be the first time they analyze their finances and understand just how much money they are making and how much they are wasting. Budgeting is the key to Financial Freedom and Chapter 13 Bankruptcy is designed to help you learn how to Budget your Money and Plan your Financial Future. Some Clients tell us this is the best Chapter 13 Bankruptcy Benefit.
The Chapter 13 Bankruptcy Trustee offers a free 2 Hour Financial Management Course which is not available in Chapter 7 Bankruptcy cases.
Converting to Chapter 7 Bankruptcy from Chapter 13 Bankruptcy allows you to Discharge debts that were incurred after the filing of your Chapter 13 Bankruptcy Petition and before the Conversion of your Case to Chapter 7 Bankruptcy. This is very helpful to people who are suffering from chronic illnesses or know they will incur future, uninsured medical expenses at the time they file their Chapter 13 Bankruptcy Petition.
For example, if a person owes $100,000.00 in medical bills and expects to incur an additional $50,000.00 in medical bills over the next year, they would not want to file Chapter 7 Bankruptcy. This is because, if they filed a Chapter 7 Bankruptcy case before the additional medical bills were incurred, they would be barred from filing another Chapter 7 Case for 8 years. If, on the other hand, they file a Chapter 13 Bankruptcy case to ward off their existing creditors and stay in the Chapter 13 case until the additional, uninsured medical bills are incurred, they can then convert to Chapter 7 Bankruptcy and discharge the $100,000.00 of medical bills incurred prior to filing their Chapter 13 Bankruptcy Case as well as the $50,000.00 of medical bills that were incurred while their Chapter 13 Bankruptcy Case was pending.
Just because you file a Chapter 13 Bankruptcy case does not mean you have to stay in it for the entire 3 to 5 year period. At any time, you can voluntarily dismiss your Case. Moreover, you also have the right to convert your case to Chapter 7 Bankruptcy provided you qualify to file a Chapter 7 Bankruptcy case. The right to dismiss is helpful to many people who are experiencing only short-term financial problems. The right to convert is valuable to people who expect to incur substantial expenses, such as medical bills, in the future. The next Paragraph will help you understand this benefit in more detail.
If you owe Income Taxes for a tax year more than 3 years prior to filing your Bankruptcy Petition, those Income Taxes are usually dischargeable provided you filed your Tax Return on time and have not been recently assessed by the IRS. Income Taxes for years less than 3 years prior to filing your Bankruptcy Petition are non-dischargeable. Chapter 13 Bankruptcy does, however, allow you to pay these non-dischargeable taxes over a period of 3 to 5 years without further Penalty or Interest. In addition, in a Chapter 13 Bankruptcy, you won't have to pay any past penalties even if the underlying taxes are non-dischargeable. These savings can be enormous.
Certain Debts which cannot be discharged in Chapter 7 Bankruptcy can still be discharged in Chapter 13 Bankruptcy cases. For example, money owed as part of a divorce or property settlement cannot be discharged in Chapter 7 Bankruptcy but can be discharged in Chapter 13 Bankruptcy. There are many types of Debt which can be discharged in Chapter 13 Bankruptcy but not in Chapter 7 Bankruptcy. We will review your debts at your Free Initial Consultation and advise you of your options.
In Chapter 13 Bankruptcy, you can ask the Court to incorporate your annual Income Tax Refund into your Chapter 13 Bankruptcy Plan and this will allow you to retain the refund each year while your case is active. In Chapter 7 Bankruptcy cases, you may lose some or all of your Income Tax Refund depending on when you file your Petition.
Like Cars, Mobile Homes depreciate. Therefore, several years after you purchase your Mobile Home, you may owe far more than it is actually worth. For this reason, the Chapter 13 Bankruptcy Code allows you to payoff a Mobile Home Loan at fair market value over a 3 to 5 year period at an interest rate that is usually around 5%. For example, if you owe $60,000.00 on a Mobile Home that is only worth $15,000.00, you would only be required to pay about $300.00 per month in a Chapter 13 Bankruptcy Plan.