Although the overwhelming number of people who have filed for bankruptcy in the past have chosen and can qualify for Chapter 7, there are several reasons why some may select to file Chapter 13:

  • You cannot file for Chapter 7 bankruptcy if you received a Chapter 7 discharge within the previous eight years (unless you paid off at least 70% of your unsecured debts in a Chapter 13 bankruptcy. On the other hand, you can file for Chapter 13 bankruptcy at any time.)
  • You have valuable nonexempt property.
  • You’re behind on your mortgage or car loan. In Chapter 7, you may have to give up the property or pay for it in full during your bankruptcy case. In
  • Chapter 13, you can repay the arrears through your plan, and keep the property by making the payments required under the contract.
  • You have debts that cannot be discharged in Chapter 7.
  • You have codebtors on personal (nonbusiness) loans. In Chapter 7, the creditors may pursue your codebtors for payment. In Chapter 13, the creditors may not seek payment from your codebtors for the duration of your case.
  • You feel a moral obligation to repay your debts, you want to learn money management, or you hope new creditors might be more inclined to grant you credit after a Chapter 13 than they would after a Chapter 7.