Is chapter 13 bankruptcy always a good alternative and why?

Chapter 7 has an income limit, most people disqualified from a 7 are disqualified because they make too much. Chapter 13 doesn't have an income limit but there is a debt limit ($1,100,000 mortgage or $380,000 of unsecured debts). Chapter 13 also requires that you have a steady income because there are monthly payments - this can make 13s difficult for people with an irregular income (teachers, realtors, etc.) But for most people, Chapter 13 is a good alternative.

If you are considering a chapter 13 it's imperative to retain an attorney. Statistically speaking, the success rates for self represented debtors in a chapter 13 is less than 2%, and the statistics don't say out of that 2% how many are lawyers filing their own cases. Don't procrastinate, make an appointment with an attorney to discuss your situation. Only through an evaluation of your circumstances can advice be rendered as to whether this is a good option for you and the results you can hope to achieve. One way of looking at a chapter 13 is that it is a type of settlement of your debts but rather than needing to negotiate with the creditors as far as how much they will receive (in other words what percentage of what is owed they will actually be paid) that number instead comes from some calculations of your income, allowable expenses, non-exempt property, secured debt obligations, and unsecured priority claims. The added bonus is that whatever percentage of the debt will not be paid in a chapter 13 is discharged at the end AND is NOT taxable income. So the ultimate question is how much will you have to pay back? It could be a number between 0% to 100%. To figure this out, the attorney will need details about your circumstances to make the calculations. See someone at your earliest convenience as sometimes timing can make a difference, sometimes filing sooner is better than later, or the other way around.

If you have too much income to file under Ch. 7, then indeed the usual decision is to file under Ch. 13. BUT to file under Ch. 13 you must have regular income. Consult an experienced bankruptcy lawyer. It's almost always a good idea.

That advice sounds plausible. If I were you, I would make an appointment with an experienced BK attorney to get all your questions answered. I charge a small fee for these meetings. The meetings take an hour, but you will learn a lot (lawyers who advertise free consultations generally only meet with you for about 15 minutes. I do a detailed CH13 payment plan analysis, and explain the entire process). You get what you pay for. Good luck!

Chapter 13 is usually not a good alternative to Chapter 7 unless you have the types of debts that are best suited for Chapter 13. this would include past due mortgage payments, tax debts or child support. If you are not eligible to file Chapter 7 because you have money left over in your budget after paying minimum living expenses, credit counseling or even debt settlement can be a good choice. But if you think you cannot file Chapter 7 because you are over the median income, you have gotten bad advice.

Chapter 13 is often, but not always an option for someone who does not qualify under the means test for a Chapter 7 bankruptcy. There are, however, exceptions. An individual debtor seeking relief from creditors under the bankruptcy code may find herself unable to satisfy the requirements of the means test where her income is above the median income (after all allowable deductions) in her home state. In those cases, if her debts are primarily consumer debts (as opposed to debts incurred as a result of business dealings), she will not have the option of a discharge under Chapter 7. Most similarly situated individuals who wish to go forward with a Bankruptcy filing will choose to do so under Chapter 13. However, Chapter 13 has strict debt limitations for both unsecured debt (typically credit cards, medical bills and other debts with no pledged collateral) and secured debt (mortgage loans, car loans and other debts with collateral pledged). If the debts are over the limit for either unsecured (including priority debts) or secured debt, the debtor will not be able to choose Chapter 13 but will be forced consider either Chapter 7 or 11. Given our scenario, Chapter 11 will be the only viable option. Even if the debtor qualifies for Chapter 13, the option might not be right for everyone, due to an individual debtor's specific circumstances. For instance, a debtor who is forced out of Chapter 7 due to the means test will find that her minimum plan payment will be the lessor of 100% of her debts or the disposable monthly income for a prescribed five year plan of repayment. While this option works for a large number of debtors, in many cases an alternative to bankruptcy might be a better option. It is extremely important that anyone considering a Chapter 13, particularly because of means test qualification issues carefully consider all options with the advice and counsel of a qualified Bankruptcy lawyer before committing to any bankruptcy filing.

It forces your creditors into a repayment plan that you can afford.

I would strongly suggested you counsel with a bankruptcy petitioner prior to the time you to undertake a bankruptcy filing. Is generally true that if you do not qualify for Chapter 7 you may well qualify for Chapter 13 which commonly involves a five-year court imposed installment payment towards your current debts. It is no fun.

If you are not eligible for chapter 7 relief then you may well be eligible for a chapter 13 filing, but it is not a certainty. There are limits of the amount of debt one can owe, and you must have regular monthly income of some kind in order to file a chapter 13. Chapter 13 cases can be quite complex, and if you are considering filing one you should retain an experienced chapter 13 lawyer to guide you and help you through the process.