Advantages of Chapter 13 in Maine--Top Ten Reasons

There are Advantages to a Chapter 13 Bankruptcy in Maine.  I confess to often using the phrase, "failed the means test" when a client appears to be "forced" into a Chapter 13 case, but for the right client and the right set of circumstances, Chapter 13 holds a number of advantages.  In the Late Night tradition I offer the following top ten advantages of a Chapter in inverse order:

10.  A Chapter 13 forces you to budget.  Let's face it, we can all use some budget discipline. 

9.  A Chapter 13 stays on your credit report for 7 years rather than the 10 years of a Chapter 7 and you start to rebuild your credit during the Chapter 13.

8.  Creditors often forget to file claims so you may find that amount you need to pay is less than you thought. 

7.  A Chapter 13 can discharge some debts that are not dischargable in a Chapter 7--such as debts arisng from "lying, cheating and stealing."

6.  Chapter 13 provides a way to pay your non-dischargable tax debts over the course of 5 years without further accrual of penalties or interest without going through the hassle of the offer in compromise process.  Penalties get general unsecured treatment. 

5.  You get to refinance your car or other secured personal loans over the term of your Chapter 13 with a reduced interest rate which can substantially increase your cash flow and you can reduce those claims to the value of the collateral. 

4.  You can catch up on mortgage and other loan arrears over the term of your plan (up to 5 years) withou going through the uncertainty and frustration of trying to deal with your mortgage lender's awful loss mitigation department. 

3.  You may be able to eliminate a totally underwater junior mortgage on your home.  In the current environment, that is a huge potential benefit. 

2.  You can convert (if you qualify) or dismiss (at your sole discretion) the case at any time, giving you a great deal of flexibility.  Creditors can become quite maleable once the realize how little they may be actually entitled to. 

1.  The Chapter 13 Trustee--In Maine we have a great Chapter 13 Trustee (Peter Fessenden).  While he and I don't always agree, for the honest debtor trying to make a Chapter 13 work, Peter is a tireless and aggressive advocate to help you deal with creditors and maxmize the value of your Chapter 13 case.