1. There is a lot more flexibility when you file a chapter 13 bankruptcy. You can dismiss the case voluntarily at any time or convert it to chapter 7 bankruptcy at any time. You can modify your plan if your income changes if income changes or you decide to give up a house or a car. You can refinance or sell a house during the plan.
2. A chapter 13 bankruptcy can stop or prevent a foreclosure when you are behind on mortgage payments. You will have to pay the past due payments and continue paying the regular monthly payments going forward.
3. You can strip off and remove a second mortgage, reduce the mortgage balance of an investment or multifamily home and you can reduce the loan balance of an automobile loan.
4. More debts can be discharged in a chapter 13 bankruptcy as opposed to a chapter 7 bankruptcy such as alimony and divorce payments and money owed for malicious and willful acts.
5. Attorney’s fees can be incorporated into the bankruptcy plan. You will not have to come up with a lot of money at first and usually the attorney’s fees only reduce what the creditors receive and do not increase your payment.
6. You do not have to reaffirm an automobile loan in order to keep a car.
7. You can solve a tax problem in a chapter 13 bankruptcy and pay back at a rate that you can afford and stop tax levies.
8. You can solve a child support arrears problem in a chapter 13 bankruptcy and pay the past due amount over time, usually 36 to 60 months.
9. You can protect property that is not exempt in a chapter 7 bankruptcy and keep everything you own.
10. If an automobile loan payment is too high, you can stretch out your loan balance over 36 to 60 months and lower your monthly payment.
11. If you have filed a chapter 7 bankruptcy within the last 8 years and are not eligible to file another one until 8 years have passed you can file a chapter 13 bankruptcy and make a small monthly payment and still receive a discharge from you new debts.
12. You can protect a co-debtor from collection activity while the chapter 13 bankruptcy is pending.
This is not an exhaustive list of reasons where a chapter 13 bankruptcy may be a better choice over a chapter 7 bankruptcy. You should consult with an experienced bankruptcy attorney for a full evaluation of your case.