Reasons to File a Chapter 13

1. You can file a 13 for the Husband or the Wife. If the single-debtor case runs into viability problems, then you can always file a new Chapter 13 case for the non-filing spouse. And, during the single-debtor case the non-filing spouse is protected by the 1301 stay. This strategy allows you to avoid the multiple-filing limitations on the automatic stay plus the 109(g) problems.

2. You control all of the consumer claims in the Chapter 13. The debtor has standing to file Adversary Proceedings on all pre-petition claims; to object to improper proof of claims; to pursue all claims arising during the case such as automatic stay violations; and to have a venue for filing all dischargeability proceedings.

3. Almost all of the adversary proceedings provide for fee-shifting statues that require the creditor to pay.

4. The Debtor Educational Course can be completed before the final plan payment versus within 45 days of the first date for the 341 meeting.

5. If the Debtor wants to keep a car, then the Debtor can file a Chapter 13 and avoid all of the Chapter 7 problems with redemption and ipso factor clauses if the Debtor seeks to ride-through under a keep and pay approach. Also, if the debtor determines that the Chapter 13 is beyond his or her means, the case can be converted to Chapter 7 and the debt canceled. This is not the case when the debtor has signed a Reaffirmation Agreement.

6. The dischargeability bar dates for Adversary Proceedings (which must be filed in the Chapter 13 case) transfers over to the Chapter 7. So, if the AP is not filed within 60 days of the first 341 date in the Chapter 13 case it will be barred in the converted 7 case.

7. You can now do a Chapter 13 with a “0” percent pay-back to the unsecured creditors. As a result, the Chapter 13 plan can be used to pay the Trustee, the Legal fees and the secured debts for the property the debtor really wants to keep.

8. If you convert a Chapter 13 case to Chapter 7, there is no Means Test. The Means Test only applies to a case filed “under Chapter 7.” 707(b)(3)(“filed by an individual debtor under this chapter whose debts are primarily consumer debts”). And, 348(b) does not mention 707 as a Section that applies when your convert from 13 to 7.

9. You are dealing with a Chapter 13 Trustee who really wants your plan to succeed. It is how they get paid.

10. You avoid scrutiny by the United States Trustee because you are doing exactly what Congress said should be done-file for Chapter 13.

11. You retain the ability in most jurisdictions to modify the plan as necessary to abandon secured collateral and reduce the plan payments if appropriate. The bankruptcy code allows you to skip the means test issue upon modification post confirmation. There is no reference in these code sections to the Disposable Income Test or the Applicable Commitment Period.

12. Chapter 13 provides the debtor with the ability to repay non-dischargeable taxes.

13. Chapter 13 provides the debtor with a greater opportunity to protect exempt assets from DSO claims.

14. The automatic stay in Chapter 13 is of longer duration than the Chapter 7 stay and provides the debtor with a greater opportunity to reorganize his or her affairs.

15. If you start off with a Chapter 13 case and then convert to Chapter 7, you can file another Chapter 13 within 2 years to stop a foreclosure or to deal with non-discharge priority claims. Although there is no discharge, you still get the full protection of the automatic stay.

16. You can cure mortgage arrears in a Chapter 13 plan.

17. You can still cram down non-910 claims, non-PMSI claims, and PMSI claims that are older than 1 year (other than a motor vehicle), and a vehicle purchased for use by someone other than the debtor.

18. No attorney fees for the pure 910 and 365 claims since 506 does not apply to these claims. 506 is the only basis for the award of attorney fees to an over-secured creditor. Also, there is no right to pre-confirmation interest on these claims for the same reason.

19. The Till interest rate still applies to the 910 and 365 claims plus you can stretch out payments on a 365 claim to 60 months. And, in many jurisdictions the debtor has the option of taking the Till rate or the contract rate, whichever is less. So, you can still take a 0 interest 910 claim and pay back the contractual amount due over 60 months.

20. There is no automatic relief from the co-debtor stay of 1301 even in multiple filing cases.

21. Debts incurred to pay taxes are not discharged in a 7 but are discharged in a 13.

22. Willful and malicious injury to property not discharged in a 7 but is subject to discharge in a 13.

23. Willful and malicious injury to a person is not dischargeable in a 13 but only if the state court action has gone to judgment.

24.Older taxes that were timely filed are dischargeable in a 13.

25. Non-DSO obligations are still dischargeable in a 13. In short, read this as obligations under a Property Settlement Agreement that do not qualify for alimony.

26. You can separately classify non-dischargeable debt in a 13 and repay the debt in full with interest if the general unsecured creditors receive 100% of filed and allowed claims.

27. You could theoretically be in a Chapter 13 forever. The bar on refilling is from filing date to filing date. As soon as one case is finished, the next one can start. Useful for dealing with incredibly large debts that could not be liquidated in a 7.

28. Child support income is not included in a 13, but is included in a Chapter 7.

29. Little chance of any abuse in Chapter 13 since you get to subtract all the secured payments that are contractually due over a period of 60 months. If a mortgage is in foreclosure when you file a Chapter 13, then under the law in most states the full debt has been “accelerated” so you divide the full debt plus all foreclosures fees and expenses by 60.

30. You can use 363(a)(3) to reclaim personal property that was repossessed pre-petition.

31. Chapter 13 allows you to make a mistake since you always have the right to file a voluntary dismissal. Everyone gets a 'Mulligan'

32. You can continue to repay your pension loans. The loans are no longer debts and are not even subject to the automatic stay. And, the payments are not part of disposable income.

33. Fixed and standard pension contributions are allowed to continue and are not party of the debtor’s disposable income.

34. Chapter 13 allows you to cure child support arrears, to repay back taxes, and even deal with student loans.

35. There is no longer a minimum term for Chapter 13 plans. You have new “commitment periods” of 3 and 5 years but nothing in BAPCPA says that you cannot payoff the “commitment amount” in 12 months or less.

36. Even in a second filing within 1 year of a prior dismissal, the stay is still effective for more than 30 days as to “property of the estate.” And, if you have a 1306 plan then all pre and post-petition property would be fully protected even if the stay was not extended as to the debtor.

37. In a Chapter 13 case, the stay does not terminate “as to the debtor” in a repeat filing with 1 year of a prior dismissal unless some pre-filing action was taken with respect to a debt or property securing the debtor before the 2nd filing. 362(c)(3)(A).

38. You have the option to return collateral secured by a 910 or 365 claim to the creditor in full satisfaction of the underlying debt.

39. The filing fee is $274.00 versus $299.99.

41. The Executive Office of the United States Trustee has indicated that they do not monitor Chapter 13 cases but leave this solely to the discretion of the Chapter 13 Trustees.

42. The Chapter 13 trustee in the Western District of Washington will provide the post filing debtor education class for free.