{"id":286925,"date":"2017-05-18T16:25:03","date_gmt":"2017-05-18T21:25:03","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/bankruptcy\/chapter-13\/pros-and-cons-of-declaring-bankruptcy-under-chapter-13.html"},"modified":"2025-08-17T14:14:25","modified_gmt":"2025-08-17T19:14:25","slug":"pros-and-cons-of-declaring-bankruptcy-under-chapter-13","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/bankruptcy\/chapter-13\/pros-and-cons-of-declaring-bankruptcy-under-chapter-13.html","title":{"rendered":"Advantages and Disadvantages of Chapter 13 Bankruptcy"},"content":{"rendered":"\n
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Advantages and Disadvantages of Chapter 13 Bankruptcy<\/h1>\n\n
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\n By Christie Nicholson, J.D.<\/a> | Legally reviewed by Jordan Walker, J.D.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Key Takeaways<\/h2>\n

Filing Chapter 13 bankruptcy lets you keep your property and repay debts over three to five years.\u00a0This can halt\u00a0foreclosure, cure mortgage arrears, manage large secured debts, and prevent aggressive collections while you get a structured path to rebuild credit and make\u00a0a fresh start. Advantages include time to catch up on payments, potential reductions in\u00a0payoff amounts\u00a0on\u00a0many unsecured debts,\u00a0protection for co-signed consumer debts during the case, and a chance to stabilize your finances without liquidating assets. Downsides include a long repayment commitment, higher costs\u00a0than a\u00a0Chapter 7 bankruptcy, a negative mark on your credit for years, loss of most credit card access, and limits on filing another bankruptcy\u00a0soon after. You’ll still have to pay non-dischargeable debts like child support, alimony, and most\u00a0student loans.\u00a0To be accepted into a Chapter 13 program, you must have\u00a0enough steady income to make plan payments. Consulting an\u00a0experienced bankruptcy lawyer<\/a>\u00a0can help weigh these tradeoffs for your situation.<\/i><\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n\n

In most situations, filing for bankruptcy should be the last option available for you.\u00a0Once you decide to file, you must determine what\u00a0type of bankruptcy<\/a>\u00a0will work best for you. Depending on their financial situation, most individual debtors file for either Chapter 7 or Chapter 13. For people who owe a lot of debt and have assets they want to protect, Chapter 13 may be the best option. In a Chapter 13 bankruptcy case, the debtor proposes the plan, the Chapter 13 trustee reviews it, and the court confirms. You begin making plan payments 30 days after filing.<\/p>\n

While Chapter 13 bankruptcy is a viable option for many people facing\u00a0foreclosure<\/a>, repossession, and legal action, it has drawbacks. This article\u00a0explains\u00a0how a Chapter 13 bankruptcy case works and how Chapter 13 differs from Chapter 7 bankruptcy. It also examines\u00a0the advantages and disadvantages of filing for Chapter 13 bankruptcy.<\/p>\n

Chapter 13 vs. Chapter 7<\/h2>\n

Most individuals who file for bankruptcy opt for either\u00a0Chapter 7 or Chapter 13<\/a>. There are other types of bankruptcies, but they are rarely a good fit for individual filers. When deciding which chapter to file, you and your\u00a0bankruptcy attorney<\/a>\u00a0should consider both options and choose the one that will best help your financial situation.<\/p>\n

Before you decide to file for Chapter 13, you should familiarize yourself with the differences between Chapter 13 and\u00a0Chapter 7 bankruptcy<\/a>.<\/p>\n

The primary difference between a Chapter 7 and\u00a0Chapter 13 bankruptcy<\/a>\u00a0is that a Chapter 7 bankruptcy results in a discharge of your debts. You do not have to repay them, and the creditors cannot pursue further debt collection activity.<\/p>\n

With Chapter 13 bankruptcy, you\u00a0repay your debts over three to five years. The bankruptcy trustee will approve a\u00a0repayment plan<\/a>, and you must adhere to the payment schedule.<\/p>\n

Some of the other differences between Chapter 7 and Chapter 13 include the following:<\/p>\n