Austin Bankruptcy Blog


3 reasons why people consider Chapter 13 bankruptcy

Posted by Sean T. Flynn | Aug 01, 2022 | 0 Comments

Bankruptcy is often the last resort for those plagued by financial woes. Although people often think of Chapter 7 bankruptcy as the best or only option for individuals overwhelmed by debt, Chapter 13 bankruptcy is also a viable option.

While it may take longer to secure a discharge and requires a structured repayment plan, there are numerous benefits to filing Chapter 13 bankruptcy instead of Chapter 7. What are three of the most common reasons that people choose Chapter 13 proceedings? 

They earn a competitive wage

Your ability to qualify for Chapter 7 bankruptcy depends on your income. You will need to adjust your income by deducting certain expenses and then compare the resulting figure with the current state median income for your household size. 

In other words, if you make a higher-than-average income given how many people are in your family, you may not qualify for Chapter 7 bankruptcy. Thankfully, you can still qualify for Chapter 13 proceedings. 

They have valuable assets they want to protect

A Chapter 7 bankruptcy often involves property liquidation. The trustee assigned to your case by the courts will review an inventory of your assets that you create and will then order the sale or liquidation of property that you cannot exempt. 

Although you can protect some of your assets using exemptions that apply to assets like real estate and vehicles, the more personal property you have, the more you potentially stand to lose in a Chapter 7 filing. If the amount of property you will lose to liquidation is worth more than the debts you will discharge, Chapter 13 might be the better solution. 

They have loans holding them back

Sometimes, it will be the debts that aren't eligible for discharge that make Chapter 13 the better option. 

Did you accept mediocre terms on your mortgage or car loan, and you now struggle to make payments? Is your student loan provider refusing to work with you because you have fallen into arrears? A Chapter 13 bankruptcy empowers you to renegotiate some of your debts with your creditors and can help you obtain better, more sustainable terms for your loans after the bankruptcy. 

Recognizing when Chapter 13 bankruptcy is the appropriate solution for your financial hardship can help you take control of your debts again.

About the Author

Sean T. Flynn

Biography A graduate of the University of North Texas, Sean went on to get his JD from the University of St. Mary's School of Law. He is licensed to practice law in the State of Texas, as well as being admitted to the U.S. Federal Court in the Northern, Eastern and Western District of Texas. Sea...


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