US Bankruptcy Law – Chapter – 13 – Advantages

Advantages :

• A bankruptcy case filed under chapter – 13 is that, it enables the petitioner to stop foreclosure during the duration of repayment of debt. However it is to be noted that the foreclosure would be reinstated upon completion of the bankruptcy case / debt repayment period.
• US bankruptcy chapter – 13 case allows the petitioner to achieve a super discharge of the kinds that are not discharegeable under the chapter – 7 cases.
• This particular chapter gives equal priority in terms of value to both the petitioner and the creditors alike.
• US bankruptcy law chapter – 13 bifurcates the security interests of the petitioner’s creditors in certain properties, that creditors are charging too much interest on, or are over-secured or both at the same time. This leads to a cram down modification of the debt.
• Chapter – 13 US bankruptcy code also prevents collection activities against co-signors who are co-debtors with the petitioners and have not filed separate cases under any chapter for the same debt, during the lifetime of the case.

Disadvantages :

• The main disadvantage of filing a case under the chapter – 13 US bankruptcy code is that under the provisions of the Fair Credit Reporting Act, a record of this bankruptcy case remains on the credit report of the petitioner for a period of up to 10 years.
• During the lifetime of a bankruptcy case filed under the chapter – 13 US bankruptcy code, the petitioner is not allowed to obtain additional credit without the permission of the US bankruptcy court with which the case has been filed.
• Since the record of the case filed under chapter -13 of the US bankruptcy code remains in the credit report of the petitioner for a period of upto 10 years, this means, that although the petitioner would have paid off his debt within a period of three to five years, yet the creditors may not be willing to give him additional credit for the next five to seven years.