Chapter 7, straight bankruptcy, wipes out debt without paying creditors. However, due to bankruptcy law and your circumstances, filing Chapter 13 may be better for you, although you pay some debts. The situations below are ones in which attorneys work with clients who choose Chapter 13.   

When Filing Chapter 13 Bankruptcy Law Is Better Than Chapter 7

1. Income Too High for Chapter 7 

To file bankruptcy under Chapter 7, you must take a means test that shows your income-to-debt ratio. If your income is too high, you cannot file Chapter 7, but Chapter 13 remains an option. Court protection and a court-approved repayment plan under Chapter 13 is a better choice than continuing to struggle with overwhelming debt.

2. Protect Non-Exempt Property

Filing Chapter 13 allows you to keep the property you own that is not covered by an exemption. Perhaps your primary residence is a home with a mortgage in Dothan but you own a vacation condo in Gulf Shores inherited from a relative years ago. Under bankruptcy law, filing Chapter 13 allows you to claim a homestead exemption for the Dothan home and catch up on your mortgage payments. By making payments to your unsecured creditors for the amounts they would have received if you had filed Chapter 7 and the Trustee had sold the condo, you save both properties. 

3. Pay Non-Dischargeable Debts

Under bankruptcy law, debts including back taxes, student loans, and past-due child support are not dischargeable. Filing a Chapter 13 bankruptcy law allows you three to five years of court protection from actions including wage garnishments, giving you time to catch up payments on the amounts you owe.

Bankruptcy law offers a variety of approaches to debt relief, and Donna C. Crooks Attorney At Law works with individuals and couples to ensure they choose the best solution for their circumstances. Applying more than 20 years of experience as a practicing attorney to each client’s situation, she has guided numerous residents of Dothan and Enterprise, AL, through Chapter 7 and Chapter 13 bankruptcy processes successfully. Find out your options for achieving a firm financial footing. Visit her website for more information and call (334) 598-9534 to schedule a confidential consultation.