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Re-printed With Permission Original Article Written By: Brian Reed

Unlike chapter 7 bankruptcy, the main purpose of chapter 13 bankruptcy is to repay one's debts to the creditors.

Unless you have a situation that mandates your filing chapter 13 bankruptcy, you are almost always best off filing chapter 7 bankruptcy.

Here are the reasons why.

• Chapter 13 bankruptcy is worse for your credit than chapter 7 bankruptcy. Read more about this below.
  

  
  

• Chapter 13 bankruptcy drags on for years and you do not get the sense of a quick closure that you get with chapter 7 bankruptcy.
  

  
  

• In chapter 13 bankruptcy you have to pay most of your debts back. That stinks if you are already struggling with keeping up with your payments in the first place.
  

  
  

• Most people who file chapter 13 bankruptcy drop out of it soon after getting started and all the money they paid into it is usually wasted.
  

  
  

• Lawyers charge more than twice for chapter 13 bankruptcy than they do for chapter 7 bankruptcy.
  

  
  

• The procedure you have to follow after you have filed chapter 13 bankruptcy is complicated and confusing.
  

  
  

• The bankruptcy court can dismiss your chapter 13 bankruptcy if you miss just one payment, and all the money you already paid into the plan is lost and you are back where you started.

However, there are situations where chapter 13 bankruptcy is either the best option or where you have no choice but to file chapter 13 bankruptcy.

You should file chapter 13 bankruptcy if:

• You are facing foreclosure on your house and do not have the money to get caught up at once, and you need more time to make up the back payments. Chapter 13 gives you the time.
• You should file chapter 13 bankruptcy if you do not qualify for a discharge under chapter 7 and you need help slowing down the creditors.
• You should file chapter 13 bankruptcy if you already filed chapter 7 bankruptcy and are now in financial trouble but you have not waited the mandatory 8 years between chapter 7s.

Keeping this in mind, you should not jump to file chapter 13 bankruptcy until you are sure it is the best option for your situation.

Chapter 13 bankruptcy uses all of the same forms as chapter 7 bankruptcy, except for two forms. The main difference in paperwork between chapter 7 and chapter 13 bankruptcy is that chapter 13 bankruptcy includes a document called the Repayment Plan. This plan describes how you are going to repay the creditors.

You can file chapter 13 bankruptcy in a number of ways. The best method is with a full-service bankruptcy preparer. We advise against using a bankruptcy lawyer for your chapter 13 bankruptcy filing, because most of them charge more than $3,500.

You will not know this when you read their ads or hire them and that is because, they will dangle a teaser deposit of only about $500, with the remaining $3,000 being paid to them through the bankruptcy court in the repayment plan.

The most discouraging part of it is that when you enter into a chapter 13 repayment plan, all of the money you pay through the bankruptcy court first goes to paying off the attorney fees before any of it gets to the creditors.

This means that for a lot of people who file chapter 13 bankruptcy and then drop out in the first year, all of their plan payments go to the bankruptcy lawyer fees. For those people, it is as if they filed chapter 13 bankruptcy just to enrich a bankruptcy lawyer and no more. Think of it. You are filing bankruptcy just to give some lawyer upto $4,000 and when you have given him all that money, you give up in exhaustion and stop the whole thing and end up where you started.

If you are going to file chapter 13 bankruptcy, use a full-service bankruptcy preparation company because you will get professional help, while paying only about $200. With a full-service bankruptcy preparer, there is no $3,000 hidden in the repayment plan like it is with bankruptcy lawyers.

For your convenience, here are the most reputable full-service bankruptcy service companies that handle chapter 13 bankruptcy.

• Miller Bankruptcy Group
• Bridgeport American Bankruptcy
• USA Bankruptcy Associates

If you hire any of a full-service bankruptcy preparer, all of your plan payments will go to the creditors that you intended to pay in the first place, not to lawyer fees.

Here are some chapter 13 facts.

1. In chapter 13, you have between 3 to 5 years to repay your creditors.
   
2. You pay your regular monthly creditor payments directly to the creditors as before, and a portion of the arrearage or back payment, through the bankruptcy trustee.
3. You pay the bankruptcy trustee a commission of as much as 10% of all the payments that you pay the creditor through them.
4. You can convert your chapter 13 bankruptcy into a chapter 7 bankruptcy if you qualify for chapter 7 bankruptcy.

We recommend Miller Bankruptcy for your chapter 13 bankruptcy filing because they have an excellent resource on chapter 13 bankruptcy filing, as well as tips on how you can bend the chapter 13 bankruptcy system to your advantage.

Whatever you do, avoid bankruptcy software for your chapter 13 bankruptcy filing. Here is why. Except for GuaranteedBankruptcy.com, all of the other web sites claiming to sell bankruptcy software do not sell bankruptcy software. They sell nothing more than the same bankruptcy forms that you can download from the court web site for free. They assume that by labeling it as software, they will find enough stupid people who will pay for something they can get for free and unfortunately, they are right.