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In general, individuals file a Chapter 7 personal bankruptcy in order to obtain a discharge of unsecured debts (credit cards, medical bills, signature loans, deficiency balances on repossessed autos, rent to old landlords, and old cell phone providers).  The discharge of the unsecured debt enables a Debtor to obtain a “fresh start.”

On the other hand, the reasons an individual needs to file a Chapter 13 bankruptcy are as follows:

  1. Far and away the biggest reason is because an individual is behind on their mortgage on their residence.  In a Chapter 13 bankruptcy, an individual can stop a Sheriff Sale.  Chapter 13 enables them to pay the mortgage arrearages over a 5 year period in order to cure the default and keep their home.
  2. Individuals file a Chapter 13 bankruptcy when they are over the family income limit for Chapter 7.
  3. Individuals file a Chapter 13 bankruptcy when they have more equity in their assets than they would be permitted to keep in a Chapter 7 bankruptcy.
  4. Individuals file a Chapter 13 bankruptcy when they obtained a Chapter 7 bankruptcy within the last 8 years and are thus ineligible for another Chapter 7 discharge.
  5. In a Chapter 13 bankruptcy you can repay real estate taxes and other tax debt over time.

EXAMINING ALL YOUR DEBT RELIEF OPTIONS:

This blog serves as a brief overview of the Chapter 13 bankruptcy process which can be quite complicated.  It is not the right option for everyone.  As such, it can be wise to examine your case and options more closely with an attorney.  The Quinn Law Firm is available for a free consultation regarding debt relief options including Chapter 7 and Chapter 13 bankruptcy.  For a free consultation, contact us at (814) 833-2222.