Yesterday we discussed that one chapter of bankruptcy was not “better” that the other, because Chapter 7 and Chapter 13 are designed to accomplish different goals. However, it is also true that a Chapter 13 offers more flexibility and more options than Chapter 7.
Frequently, I can fashion a Chapter 13 plan that pays little if anything to unsecured creditors, and is therefore like a Chapter 7, but allows my clients to catch up on missed payments and therefore keep their cars and houses. This is something that Chapter 7 cannot do.
Also, because Chapter 13 can change the interest rate on car, we frequently find that car payments can be lowered and Chapter 13. This is not possible and Chapter 7.
Also, you have to wait eight years in order to get a discharge in a subsequently filed Chapter 7. The waiting period for Chapter 13 is only four years. Therefore, a low percentage payout chapter 13 may be necessary if you need to file bankruptcy and your eight years have not yet passed.