The following are two lists. The first is a list of the most common reasons I encounter in representing clients with debt that force them to use a chapter 13 bankruptcy instead of chapter 7 bankruptcy. The second list are the most common reasons I see people choose to file chapter 13 bankruptcy as opposed to chapter 7.
Must File Chapter 13 Bankruptcy – Most Common Reasons
1. Filed a recent bankruptcy case. (8 years for from chapter 7 to chapter 7)
2. Fail to qualify for a chapter 7 bankruptcy – i.e. fail the means test, filing chapter 7 would otherwise be done in “bad faith”
3. Majority of debt may not be discharged in chapter 7 but may be in chapter 13
Choose Chapter 13 Bankruptcy Instead of Chapter 7 Bankruptcy – Most Common reasons
1. Need to protect “non exempt” assets
2. Simply want to control creditors via court supervised repayment plan 3. Need to Protect co-debtor(s) from collection 4. Keep the IRS at bay – obtain an overall better monthly payment than installment or oic 5. Reduce Principal on certain car loans 6. Strip away/treat as unsecured debt second mortgages on home that are “wholly” unsecured 7. Stop Foreclosure and pay arrears over time.
8. Stop repossession and pay for car through chapter 13 plan at actual value.
9. Usually less expensive to actually file case than chapter 7.
10. Want to make the effort to try and pay creditors back something if only a small percentage of debt 11. Divorce related debt problems