Advantages & Disadvantages to a Michigan Chapter 13 payment plan:

Advantages to a Michigan Chapter 13 payment plan:

  1. If you choose and you can afford the payment plan, you can keep all your property, exempt and non-exempt.
  2. While debts are not canceled as in a Chapter 7 discharge they can be reduced under a Chapter 13 payment plan.
  3. You have immediate protection against creditor’s collection efforts and wage garnishment.
  4. 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).
  5. If the Chapter 13 plan provides for full payment, any co-signers are immune from the creditor’s efforts.
  6. You have protection against foreclosure on your home by your lender as long as you meet the terms of the plan.
  7. You have more time to pay debts that can’t be discharged by either chapter (like taxes or back child support).
  8. You can file a Chapter 13 at any time.
  9. You can file repeatedly.
  10. 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:

  1. You create a payment plan where you use your post bankruptcy income. This ties up your cash over the Chapter 13 plan period.
  2. Legal fees are higher since a Chapter 13 filing is more complex.
  3. Your plan and therefore your debt will last for 3 to five years.
  4. You are involved in the bankruptcy court process for the term of the 3-5 year plan.
  5. Stockbrokers, and commodity brokers cannot file a Chapter 13 bankruptcy petition.