Chapter 13 is an amazing tool for people experiencing financial difficulty. It provides a person with a chance to deal with their financial problems in a comprehensive manner. For many people, a Chapter 7 is only going to solve part of the problem.
Chapter 7 is excellent for eliminating unsecured debts like credit cards, medical bills and utility bills. Chapter 7 is not generally a useful tool for people who have other sorts of debts.
Chapter 7 can be an insufficient choice for those people having trouble paying for their car.
Chapter 7 is often insufficient for people in trouble with their first or second mortgage. Tax debts to the Internal Revenue Service, the Franchise Tax Board or even the State Board of Equalization may not be discharged in a Chapter 7. Chapter 13 offers a chance for a comprehensive solution to your financial problems.
Chapter 13 offers you a chance to stop any move to foreclose on your home by your first or second mortgage. It gives you the time to create a plan that will get you current on your home. Rental prices here in the Bay Area are sky high right now, and losing your home can often lead to a financial catastrophe.
Chapter 13 also allows you to halt any action on the part of the Taxing Authorities. The taxing authorities can be some of the most frightening because they can levy your bank accounts and take everything at any moment. A Chapter 13 stops them from collection actions and gives you time to figure a way to pay them off.
Chapter 13 also allows you, potentially, to basically refinance your auto loan. This can involve lower monthly payments for your car as well as lower the interest rate you are paying. This can be incredibly important to people who are struggling with debt to rearrange their liabilities, lower their payments and create a plan that will level the playing field for you.