Many of the Nashville clients who come to us here at Rothschild & Ausbrooks, PLLC do so with the intention of filing for a Chapter 7 bankruptcy. If you share the same intent, it is likely due to the fact that a Chapter 7 allows you to discharge many of your debts. Yet this benefit is not made available to all in order to prevent it from being abused. As you may already know, you first must pass the Chapter 7 means to determine whether or not you qualify.
What if you do not? The only way to seek bankruptcy protection then would be through a Chapter 13 case. It affords the same protection from creditors, yet it differs from a Chapter 7 in that it is basically a debt restructuring plan. Rather than have your debts discharged, you are given the chance to pay them back over a period of three to five years.
Do not assume, however, that everyone qualifies for Chapter 13. Information shared on the website for the Federal Judiciary shows that you can only file this form of personal bankruptcy if your unsecured debts are less than $394,725 and your secured debt totals less than $1,184,200. In addition, if you have had a previous bankruptcy petition (no matter the chapter) dismissed for a failure to appear or to comply with the mandates of the court within the previous 180 days, you also cannot file under Chapter 13.
While Chapter 13 may not seem to be as desirable a debt-relief option as Chapter 7, there are cases where it can offer distinct advantages, such as allowing you to stop foreclosure by including your mortgage arrears in your debt repayment plan (Chapter 7 only stops foreclosure action while your case is still active). More information on filing for a Chapter 13 bankruptcy can be found here on our site.