UncategorizedWhy Chapter 13 Bankruptcy May Be a Better Option than Chapter 7

June 4, 20130

The Top 3 Reasons Why Chapter 13 Bankruptcy May Be a Better Option than Chapter 7

When considering personal bankruptcy, a surprising number of people don’t realize that there’s an alternative to Chapter 7. In fact, many people don’t really understand what filing Chapter 7 means. I hope that this post will help enlighten readers and help explain the differences, as well as why Chapter 13 may provide a better debt relief solution for some individuals.

First, let’s explore what filing Chapter 7 means and what it does, if your petition is granted. When a personal bankruptcy of this type is granted, it means that the individual who has filed is completely incapable of paying his or her debts, in other words, “bankrupt”. In this case, the two most significant things that happen are:

  1. The individual stops making payments on all dis-chargeable debts and those debts are cancelled by the court.
  2. The record of the bankruptcy is added to the individual’s credit report and remains there for 10 years.

That’s a very simplified version, of course. There are other things that may occur, such as liquidation of certain assets to compensate creditors, but the 2 points above are the final outcome and have the greatest effect on the person’s status. The effects will be both positive and negative, so it’s crucial to understand exactly what you’re getting into before you file.

Chapter 13 offers a completely different approach and outcome. In a nutshell, this type of filing allows the court to construct a new payment plan for the individual’s debts, after which the person filing is still responsible for payment of the debts. There are requirements that must be met and a complete statement of finances is imperative for the court to assess whether the person is eligible for this protection. If so, there are 3 distinct advantages to choosing this option:

  1. The debts are not discharged; the creditors simply agree to a new payment plan, often with a lower total payoff.
  2. Although it shows on an individual’s credit report, a Chapter 13 indicates to those who check the person’s credit that he or she is paying the debts.
  3. This type of bankruptcy remains on a credit report for only 7 years.
  4. So, is this “the answer” for any person that needs relief from overwhelming debt? Absolutely not! It’s only one of many options and even if you qualify, it may not be the best option. Your attorney must be prepared to examine all the alternatives and work with you to decide which plan best suits your personal financial situation and provides the most positive outcome.

To explore this and other debt relief possibilities,  contact accomplished SAN DIEGO BANKRUPTCY LAWYER Jeff Larkin. To seek advice from CARLSBAD BANKRUPTCY ATTORNEY Jeffrey Larkin, call 877.25.NEW.HOPE for a free consultation today or visit his BANKRUPTCY ATTORNEY IN CARLSBAD CA Google+ Local page.

For more details, Please visit our website:  https://larkinfirm.com

Leave a Reply

Your email address will not be published. Required fields are marked *


The Larkin Law Firm is a debt relief agency. In addition to other debt relief services provided, we help individuals and businesses file for bankruptcy protection under the Bankruptcy Code.

© 2020 The Larkin Law Firm