Why File Chapter 13 Bankruptcy?
- Sometimes you HAVE to opt for chapter 13 bankruptcy because you ain’t eligible for chapter 7 (e.g. you make “too much” money and your debt’s primarily consumer debt); but don’t fret: chapter 13 bankruptcy can be almost as good as lucky chapter 7.
- Other times you would WANT to choose chapter 13 over chapter 7 bankruptcy. Chapter 13 bankruptcy has unique benefits (see below). Our San Diego Bankruptcy Attorney will help you make an informed decision on which chapter to choose from Ye Olde Bankruptcy Code menu.
In a nod to the late, great Joe Cocker, put it this way: Chapter 13 Bankruptcy Lifts You Up (Where Debt Don’t Belong) [sic]
Here’s what chapter 13 bankruptcy can do for you:
- In Chapter 13 bankruptcy we…. strip. It’s not as sexy as it sounds, but it’s pretty nifty. “Stripping” or junior lien avoidance refers to removal of a wholly unsecured lien. Or in English: we can Get Rid of your Entire Second Mortgage (or Equity Loan). This “lien strip” is doable IF you owe more on your first mortgage [or senior lien(s)] than the home is worth. This is a boon to the “underwater” homeowner; the maneuver is available in chapter 13 bankruptcy, but not in chapter 7. 
- Chapter 13 bankruptcy can save your home. You might be hopelessly behind on your mortgage payments. Chapter 13 bankruptcy lets you pay back the arrears over up-to 60 months without added interest. The chapter 13 bankruptcy right to “cure” (repay) past-due debt will likewise stymie the repo man if you’re behind on your auto loan.
- Chapter 13 bankruptcy can lower your car payment. If you financed your motor vehicle 2½+ years before filing bankruptcy (or more precisely: 910+ days before), then the loan’s principal balance can be “crammed down” to the collateral’s present market value. In other words, you can shave thousands off the loan.
- No matter when you financed your car (truck, jet pack, hovercraft, etc.), you can lower your monthly expense by extending payments for up to 60 months.
- Chapter 13 bankruptcy lets you pay back student loan- and certain tax-debt (debts that need to be paid in full) by extending payments over a 60-month period. In chapter 13 bankruptcy, you have the right to make lower payments, whether the carnivorous creditors like it or not.
Your San Diego bankruptcy attorney will patiently explain how chapter 13 bankruptcy can benefit YOU.
Chapter 13 Bankruptcy: Keep Babies on Your Back– Not Debt!
 Unless…. On March 24, 2015, the Supreme Court (SCOTUS) entertained bankruptcy lawyer argument in Bank of America NA v. Caulkett. The issue–pending decision–is whether (your San Diego bankruptcy lawyer) may strip second mortgages in chapter 7 bankruptcy. Caveat: some didactic elements in BofA’s counsel’s speech conflict with information in the San Diego bankruptcy lawyer blog. But, chill: the latter is correct.