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Advantages of a Chapter 13 Over a Chapter 7
A Chapter 13 case offers numerous advantages over a Chapter 7 for those with a lot of debt secured by property or collateral (vehicles, furniture, home, land, etc). Many of these debts can be extended, altered, reduced or restructured in the Chapter 13 Plan.
Some of the more important benefits of a Chapter 13 are:
- Delinquent house notes or mobile home with land notes (which are considered a mortgage loan) can be paid back a little each month over a 36-60 month period.
- Delinquent taxes can be paid over a 36-60 month period without the penalties and interest (penalties and interested are stopped upon filing the Chapter 13) .
- Delinquent child support and alimony can be paid back over a 36-60 month period.
- Mobile home only debt (no land attached to the loan) can be paid for at the current value and extended over a 36-60 month period, thereby lowering the total amount owed and possibly even lower the monthly payment.
- Secured debts (such as cars, trucks, furniture, appliances, and household goods) can be extended over a 36-60 month period, thereby lowering the monthly payment.
- Secured debts (such as furniture, appliances, and household goods) purchased more than one year ago can be paid for at their current value and extended over a 36-60 month period, thereby lowering the amount owed and the monthly payment.
- Vehicles you have owned for more than 2 1/2 years can be paid for at their current value, not what is owed the creditor, and this new amount can be paid over a 36-60 month period, lowering the amount owed and the monthly payment.
- Vehicles in your name, but used by someone else in the family can be paid for at their current value and this new amount can be repaid over a 36-60 month period, lowering the amount owed and the monthly payment.
- The interest rate on secured debts in Chapter 13 is only 7%.
- Co-signers and others liable on your debts are protected by your Chapter 13 filing.
- Some Property Settlement obligations that are not alimony can be discharged.
- Student loan payments can be reduced or postponed over a 36-60 month period.
- Foreclosure is not allowed during the Chapter 13 without permission from the court.
- Repossession is not allowed during the Chapter 13 without permission from the court.
