It depends on each client. Chapter 13 Bankruptcy can do more than a Chapter 7 Bankruptcy. Chapter 13 Bankruptcy can stop foreclosure and car repossession by putting the arrears in a payment plan up to 60 months. Chapter 13 Bankruptcy can force your creditors, especially IRS tax debts, into a payment plan up to 60 months that might be more reasonable than without it. Chapter 13 Bankruptcy can discharge more debts than a Chapter 7 Bankruptcy. You can keep all assets in a Chapter 13 Bankruptcy if your assets would be liquidated in Chapter 7 Bankruptcy because you have too much assets. In effect, you can continue business operation without interruption from your creditors and fear of Chapter 7 trustee liquidation under Chapter 13 Bankruptcy.
However, Chapter 7 Bankruptcy does not require a payment plan like Chapter 13 Bankruptcy. Keep in mind that a Chapter 13 payment plan does NOT mean you pay 100% of your debt. It depends on how much money you make after reasonable and necessary expenses and the value of assets in excess of the California exemptions.
Chapter 13 Bankruptcy looks at income and assets acquired during the life of the plan, which is 3 to 5 years, and your plan payment will adjust accordingly. Chapter 7 Bankruptcy only looks at your income and assets at the time of filing. However, you must disclose any known changes of income within the next 12 months in the bankruptcy petition. So if your income or assets will increase within the 3 to 5 years period, you might want to file for Chapter 7 Bankruptcy if you qualify.
These are some the many factors you must consider before deciding to file either a Chapter 7 or 13 Bankruptcy. Consult an experienced Bankruptcy Attorney to determine what works best for your case. Muoi Chea is an experienced bankruptcy attorney with offices in Sacramento, Stockton, and Fairfield, CA to help provide residence of Northern and Central California debt relief through bankruptcy filing and representation in bankruptcy court in Sacramento and Modesto, California.