any advantages in filling chapter 13 instead of 7?

[jo23171]

Hello everyone,

I came to the conclusion most likely I'll have to file for bankruptcy.

the question I have is... Is there any advantage in filling chapter 13 instead of 7 FOR THE DEBTOR?

I read on some posts they both stay on your credit record for 7-10 yrs.

And the 13 you have to pay some money back. I don't get it why some people file for chapter 13 instead of 7

[justbroke]

First, Chapter 13 stays on your report for 7 years. Chapter 7 stays for 10 years.

You can't always choose to file one or the other. Generally speaking, it's a function of available income and what you are attempting to do.

Chapter 13 is a so-called "wage earners" plan. That's where you pay back your creditors over time (3 to 5 years). Sometimes, you have no choice on filing a Chapter 7, because the law is very strict on who can file a Chapter 7 (and it's mostly income based). For example, if you can "afford" to pay your unsecured creditors back, after deducting expenses, even as little as 5% over 3 to 5 years... you can only do a Chapter 13.

Chapter 7 is also known as a "straight liquidation". This is where they sell everything you have... that's everything for which you don't have an exemption. They can only sell things in which you have equity. Chapter 7 may not save your home from foreclosure because there are no provisions to cure arrearages (the money you owe from missed payments) in a Chapter 7.

Of course, there are variations to what I wrote, but those are the broad strokes.

Generally Chapter 7 is for someone who is really having trouble and has no way to pay creditors (through a Chapter 13 plan). Chapter 13 is for folks who want to save property or other assets, and can afford to pay their creditors through a 3 to 5 year plan.

[HHM]

In the abstract, the answer is no, there is no advantage.

As has already been said, you don't necessarily get to choose. In most cases, a 7 is usually preferable to a 13.

[jo23171]

I think I could be approved for chapter 7. Had my own business which went under and I have $100k+ in CC debt, no assets, no job, no income, no real estate. I have nothing left.

I do have a question about a small business line of credit I have with B of A. 75% of my debt is from that. If my business files for bankruptcy am I still responsible for it?

[justbroke]

I do have a question about a small business line of credit I have with B of A. 75% of my debt is from that. If my business files for bankruptcy am I still responsible for it?

If you are a sole-proprietor with a d/b/a (doing business as) designation... it's YOU who are filing, not your business. The nice thing is, you should be able to do a Chapter 7 if your debt is non-consumer!

The kicker will be proving the CC debt is Business debt. For example, if you used a "consumer" card to make purchases, it could be more difficult to prove. However, if you were like me, and had Business credit cards... easier to prove it wasn't consumer debt.

The only way for your business to file is if it's some sort of Corporation (or LLC or limited partnership).

[Flamingo]

Hello everyone,

I came to the conclusion most likely I'll have to file for bankruptcy.

the question I have is... Is there any advantage in filling chapter 13 instead of 7 FOR THE DEBTOR?

I read on some posts they both stay on your credit record for 7-10 yrs.

And the 13 you have to pay some money back. I don't get it why some people file for chapter 13 instead of 7

Your situation is the indicator of what Chapter you end up filing if you are eligible to file. Chapter 7 eliminates your debts in one swoop. In a Chapter 13, you pay back a portion of your debts, or 100%, during a period of 3 to 5 years. Most people suggest going for a Chapter 7 if you can because Chapter 13 is no piece of cake to get through for anyone, but is worth it if you have assets you want to and can protect (i.e., house with major equity). Best of luck to you!

[jo23171]

Those debt consolidation commercials sounds like a chapter 13 but instead of filling you just settle?

[liz417]

Those debt consolidation commercials sounds like a chapter 13 but instead of filling you just settle?

Those debt consolidation places try to negotiate with your creditors. Your creditors are under no obligation to work with them. Under a ch 13 bk, your creditors have to accept what the trustee has decided what the debtor can pay back.

Good Luck!

[chloe0724]

I think that a 13 also teaches you how to not get into trouble in the future. I wish I could have filed a 7, but I think in the end, this will work out much better for me and my family because we are forced to live within our means.

[Cali]

I disagree. There was a person at my 341 that filed C13 before and they were filing a C7.
And even if you file a C13, it doesn't mean something could possibly happen to make you file again. And it doesn't mean because you are learning to live w/in your means while in the payment plan that you will continue to do so after your discharge.

I think that a 13 also teaches you how to not get into trouble in the future. I wish I could have filed a 7, but I think in the end, this will work out much better for me and my family because we are forced to live within our means.

[chloe0724]

Cali,

I was just thinking about my own experience with this whole thing.

[fltoo]

Just Broke, now that I am closing in on the waiting period for my filing, I have been considering other options, including, maybe not filing. I have not even really spoken to an attorney about all my options yet. You seem knowledgable on business BK's.

I was thinking about a Chap 7 non-consumer.

I was a sole prop, DBA, but of course, all my charges for the business were on persoanl cc's. I figured I had to do a personal Chap 7. But, when you look at my cc statements, all the charges are obviously from business vendors.

Anyone have an idea on whether this would fly?

BTW, I had read somewhere about the % of business to personal debt, but now can't find it. Anyone know?

[jo23171]

what happens if I keep making monthly payments on all my CC bills BUT a lot lower than the minimum payment?

OR what happens if I don't do anything and simply stop paying? Unpaid or delinquent accounts will come out of credit report after 3yrs?

[HHM]

what happens if I keep making monthly payments on all my CC bills BUT a lot lower than the minimum payment?

OR what happens if I don't do anything and simply stop paying? Unpaid or delinquent accounts will come out of credit report after 3yrs?

There is more to it than your credit report. But keep in mind, those delinquent accounts get sold to collection agencies who "re-age" them and place them back on your credit report. You do not want to go down this road, it does not work.

Paying less than the minimum is still a default. Not paying is a default.

[jo23171]

Thanks for all your help!! I just wanted to salvage my credit. And what happens to the CC that have a $0 balance? Do I keep them after a BK filling?