In many cases, a Louisville family may file a Chapter 13 bankruptcy, which involves repaying creditors all or part of the family’s debts over the course of 3 to 5 years, simply because they make too much income to qualify for a personal bankruptcy under Chapter 7. In other cases, people might sense a moral obligation to repay their debts as best as possible, even though they see the financial advantages to filing a Chapter 13.

However, it is important that those who are looking at a Chapter 13 as an option view it not as the backup choice to a Chapter 7 personal bankruptcy or as some sort of punishment for making too much money. Indeed, many Kentuckians are better off financially because of a Chapter 13, and in some cases, the Chapter 13 may help them to keep property to which they want to hold on.

As this blog has mentioned, many people use Chapter 13 to protect their homes form foreclosure, as the Chapter 13 is generally more effective in doing this than a Chapter 7. Other advantages include the fact that a person who proceeds under Chapter 13 may be able to effectively refinance certain debts to extend their payment terms through the life of the Chapter 13 plan, which means a person gets more time and a lower monthly payment.

Finally, a Chapter 13 does not stay on one’s credit report for as long as a traditional Chapter 7 bankruptcy. A Chapter 13 will remain on one’s report for 7 years as opposed to 10.

Whether a Chapter 13 is appropriate for an individual Kentuckian’s situation is a question that should be discussed with a qualified bankruptcy attorney. However, it is important to remember that in some circumstances, it really is the best choice.