Home » Bankruptcy Law » Chapter 7 Bankruptcy or Chapter 13?

Most people who file for bankruptcy file for Chapter 7 bankruptcy, simply because under Chapter 7, all of your dischargeable debts are wiped clean. However, there are reasons to file for Chapter 13 bankruptcy. First, if you have filed for bankruptcy within six years, you have to file under Chapter 13. Also, if you have valuable nonexempt property that you want to keep, under Chapter 7, it would be liquidated. Under Chapter 13, you can keep it. Furthermore, if you are behind on a mortgage or car loan, under Chapter 7, you’ll either have to give up the property or pay for it in full. Under Chapter 13, you can keep it and repay through your reorganization plan. Another reason to file Chapter 13 instead is if you have cosigners or dischargeable debts – under Chapter 7, your creditors may go after your cosigners. Finally, many choose Chapter 13 out of a moral obligation to pay off their debts.


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