Is Chapter 13 bankruptcy right for me?
You are underwater on a second mortgage
If you have more than one mortgage and your total mortgage debt exceeds the value of your home, Chapter 13 can help. In Chapter 13, underwater second mortgages can be eliminated through a process called lien stripping. Basically, this means that your obligation to repay your second mortgage is discharged, allowing you to focus your efforts on staying current on your first mortgage.
You owe significant amounts of nondischargeable debt
If you owe debt that cannot be discharged in bankruptcy, such as taxes, alimony or child support, filing Chapter 13 is beneficial. It gives you three to five years to repay this debt while preventing creditors (such as the IRS) from garnishing your wages or taking other actions to collect the debt. This is a feature that Chapter 7 does not offer.
Consult an attorney
Chapter 13 is a powerful means of helping you with a hopeless debt situation. However, it is not appropriate in all cases. To find out more if it is right for you, speak with an experienced bankruptcy attorney. An attorney can consider your individual situation and recommend the best way to proceed.