Chapter 13 Bankruptcy Benefits

Contrary to many beliefs, filing a Chapter 13 bankruptcy has many advantages over a Chapter 7 bankruptcy. After reviewing your situation, our Colorado attorney’s can walk you through which chapter would be the best to file here in Colorado.

1. Strip off Your Second Mortgage
2. Save Your House or Car when you are behind on payments
3. Longer time to Reorganize your Affairs
4. The Chapter 13 Trustee v. Chapter 7 Trustee
5. Keep Assets that are not exempt in a Chapter 7 Bankruptcy
6. You may not have to pay back anything to unsecured creditors
7. You can Convert your Chapter 13 to a Chapter 7 Bankruptcy
8. You do not need to sign a Reaffirmation Agreement
9. Less Scrutiny by the Department of Justice
10. You can modify your Chapter 13 plan at anytime
11. Repay Back Taxes
12. Repay Child Support
13. Penalties associated with Willful and Malicious Injury
14. Divorce Settlement Obligations are Dischargeable
15. Pension Loans

Strip off Your Second Mortgage

In some circumstances, you can get rid of your second mortgage or your Home Equity Line of Credit (HELOC) by filing bankruptcy here in Colorado , which will help you make smaller payments on the house in the future. This is one of the few benefits of the new bankruptcy law that a highly trained Colorado attorney can help you with. Not every state has this option so give us a call before the law changes and we can see if this is an option for you. Back to Top

Save House or Car when you are behind on Payments

You can cure mortgage or car arrears in a Chapter 13 plan and bring yourself current during the next 36-60 months rather than need to do so immediately to save your house from foreclosure or repossession. In many circumstances, you can even save a car that has recently been repossessed. Back to Top

Longer time to Reorganize your Affairs

The automatic stay in Chapter 13 is of longer duration than the Chapter 7 stay and provides you with a greater opportunity to reorganize your affairs. Back to Top

The Chapter 13 Trustee v. Chapter 7 Trustee

You will deal with a Colorado Chapter 13 Trustee who is notoriously understaffed and not a Colorado Chapter 7 Trustee who gets paid by the amount of non-exempt assets that are located in your case. Thus, historically, there is less scrutiny. Back to Top

Keep Assets that are not exempt in a Chapter 7 Bankruptcy

If you want to keep a car, boat or house that is not exempt under Colorado Bankruptcy Law, then you can file a Colorado Chapter 13 and avoid all of the Chapter 7 problems with the Colorado Chapter 7 Trustee. Back to Top

You do not have to pay back anything to unsecured creditors

You can now do a Chapter 13 with a “0” percent pay-back to the unsecured creditors in some circumstances. As a result, the Chapter 13 plan can be used to pay the Colorado Chapter 13 Trustee, the legal fees and the secured debts for the property the debtor really wants to keep. This is the same that you would probably spend in a Chapter 7 bankruptcy. Back to Top

You can Convert your Chapter 13 to a Chapter 7 Bankruptcy

In most cases, you can convert a Chapter 13 case to Chapter 7 at anytime and receive your discharge. Back to Top

You do not need to sign a Reaffirmation Agreement

Because your secured property will be provided for in the Chapter 13, you do not need to sign a reaffirmation agreement. Reaffirmation agreements are only used in a Chapter 7 bankruptcy. Back to Top

Less Scrutiny by the Department of Justice

You avoid less scrutiny by the United States Trustee because you are doing exactly what Congress said should be done-file for Chapter 13. The Executive Office of the United States Trustee has indicated that they do not monitor Chapter 13 cases but leave this solely to the discretion of the Chapter 13 Trustees. Back to Top

You can modify your Chapter 13 plan at anytime

You retain the ability to modify the plan as necessary to abandon secured collateral and reduce the plan payments if appropriate. Back to Top

Repay Back Taxes

Older taxes that were timely filed are dischargeable in a 13. The Colorado Chapter 13 also provides the debtor with the ability to repay non-dischargeable taxes. Once you file your bankruptcy with the bankruptcy court, these taxes cannot increase and are just chiseled down over the course of your bankruptcy. This does not occur in a Chapter 7 bankruptcy. Back to Top

Repay Child Support

Like taxes, Domestic Support Obligations can be provided for and brought current in the Chapter 13 bankruptcy. Some Chapter 7 Trustees will pursue such claims as a source of fees and commissions. Back to Top

Penalties associated with Willful and Malicious Injury

Willful and malicious injury to property is not discharged in a Chapter 7 bankruptcy but is subject to discharge in a Chapter 13 bankruptcy. Willful and malicious injury to a person is not dischargeable in a 13, but only if the state court action has gone to judgment. Back to Top

Divorce Settlement Obligations are Dischargeable

Non-Domestic Support Obligations are still dischargeable in a 13. Under the new law, they are not dischargeable under a Chapter 7 Bankruptcy. Thus, anything in your separation agreement that does not relate to alimony or child support are dischargeable only in a Chapter 13 bankruptcy. Back to Top

Pension Loans

You can continue to repay your pension loans. The loans are no longer debts and are not even subject to the automatic stay. And, the payments are not part of disposable income in a Chapter 13. Back to Top