Sunday, September 20, 2009

Advantages & Disadvantages of a Chapter 13 Bankruptcy

Advantages of a Chapter 13 Bankruptcy

1. A Chapter 13 can allow you to eliminate and destroy a 2nd Mortgage by lien stripping where the 2nd Mortgage has no equity in the home. (If the home is worth less than the 1st Mortgage).
2. Only a Chapter 13 will "cure " a foreclosure.
3. By reviewing and objecting to improper claims you often eliminate much of the unsecured debt.
4. If you are unable to complete the Chapter 13, you may convert to a Chapter 7 or obtain a "hardship discharge."
5. A Chapter 13 may be paid off early by cashing in a retirement, inheritances or a mortgage.
6. Often a home can be refinanced at a lower rate 1 year after on time payments in a Chapter 13.
7. Debts such as taxes, that are not dischargeable in a Chapter 7 may be dischargeable in a Chapter 13.
8. Cosignors can be protected in a Chapter 13 not in a Chapter 7.

Disadvantages of a Chapter 13
1. Partial to complete repayment is required.
2. A typical Chapter 13 repayment plan lasts for three years or five years.
3. Annual budget reports are required.
4. You lose your annual tax refund in a Chapter 13 if your plan is less than 100% until discharge.

Stephen M. Dunne, Esq.
Dunne Law Offices, P.C.
(215) 854-6342
1500 JFK Blvd, Two Penn Center, Suite 200
Philadelphia, PA 19102