Advantages & Disadvantages to a Michigan Chapter 13 payment plan:
Advantages to a Michigan Chapter 13 payment plan:
- If you choose and you can afford the payment plan, you can keep all your property, exempt and non-exempt.
- While debts are not canceled as in a Chapter 7 discharge they can be reduced under a Chapter 13 payment plan.
- You have immediate protection against creditor’s collection efforts and wage garnishment.
- More debts are considered to be dischargeable (including debt you incurred on the basis of fraud and credit card charges for luxury items immediately prior to filing).
- If the Chapter 13 plan provides for full payment, any co-signers are immune from the creditor’s efforts.
- You have protection against foreclosure on your home by your lender as long as you meet the terms of the plan.
- You have more time to pay debts that can’t be discharged by either chapter (like taxes or back child support).
- You can file a Chapter 13 at any time.
- You can file repeatedly.
- You can separate your creditors by class where different classes of creditors receive different percentages of payment. This enables you to treat debts where there is a co-debtor involved on a different basis than debts incurred on your own.
Disadvantages to a Michigan Chapter 13 payment plan:
- You create a payment plan where you use your post bankruptcy income. This ties up your cash over the Chapter 13 plan period.
- Legal fees are higher since a Chapter 13 filing is more complex.
- Your plan and therefore your debt will last for 3 to five years.
- You are involved in the bankruptcy court process for the term of the 3-5 year plan.
- Stockbrokers, and commodity brokers cannot file a Chapter 13 bankruptcy petition.