When to File for Chapter 13 Bankruptcy


To declare that you are bankrupt is not a pleasant thing to do. There is so much more to lose than to gain, but then again, it is quite a relief since you can now pay your secured debts at your convenience. You also stop the calls and notices given by the lenders, which sometimes can be so annoying and depressive. If you have weighed your options and chosen to file for Chapter 13, you may wonder when to file bankruptcy Chapter 13. We will come to that later. First, let’s look at the number of reasons why you should file for Chapter 13 rather than Chapter 7 bankruptcy.

When to file for chapter 13 bankruptcy

Pros of Chapter 13 bankruptcy

While it takes longer to pay off your debts, this debt settlement plan allows you adequate time to make the payments. You do not have to take on more debt to clear your name with the creditors. You make payments based on the Chapter 13 repayment plan. Hence, your lenders cannot force you to pay in lump sums. You also get to remain with the property you are making payments for. Furthermore, you can acquire new credit cards in one to three years, although that might be what led to your present financial situation. Declaring bankruptcy under Chapter 13 can help you rebuild your credit score.

When to file bankruptcy Chapter 13

First, if you have missed a couple of payments on your car loan or mortgage, under Chapter 13, you can pay such payments based on your capability. During this time, the car or the property will not be seized by the court. When you require help in paying your debts but would still like to leave open the option of applying for Chapter 7 bankruptcy later, it would be wise to file for Chapter 13. This comes in handy when you cannot avoid getting into more debt in the future.

When to File a Chapter 13 Bankruptcy

Another time when it is necessary to file under Chapter 13 is if you are a farmer and you are not eligible for the family farming Chapter 12 bankruptcy because you have another debt not related to farming. In addition, if you have valuable non-exempt assets, which you will lose under Chapter 7, it is best to go for Chapter 13. Some people also choose this debt settlement plan when they are willing to pay their debts but need bankruptcy court protection.

If you had a co-debtor when taking a personal loan, filing for a Chapter 7 bankruptcy is not an option. This is because it will put your co-debtor in trouble. On the contrary, when you file for Chapter 13 bankruptcy, your co-debtor will not be affected, unless you default on your payments. If you have a tax debt, you may be forced to use Chapter 13, especially if the federal taxes make up the largest part of the debt.

Where you were given a discharge lately under Chapter 7 bankruptcy, you will need to wait for about 8 years to file again. However, you can file for chapter 13 without limitations.

The answer of when to file bankruptcy Chapter 13 depends on the conditions discussed above. If you want to keep your properties, need more time to pay debts and require protection from the court, consider applying for Chapter 13 bankruptcy.

Craig R. Chlarson - Utah Bankruptcy Attorney

My name is Craig R. Chlarson. Whether you are seeking to eliminate your debt, typically through a chapter 7 filing, or whether you are seeking to reorganize your debt, typically through a chapter 13 filing, or even if you have basic bankruptcy questions, call me today. I can help you.

To schedule an appointment, call (435) 901-3449

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