Bankruptcy Chapter 13 advantages
Chapter 13 consumer Bankruptcy in US has a number of advantages over liquidation under chapter 7. The most significant being that it gives the debtors a chance to save their homes from foreclosure. As soon as a debtor files for a chapter 13, the foreclosure proceedings are stopped and the delinquent mortgage payments are renegotiated. Nevertheless the payments need to be made according to the reorganization plan.
Chapter 13 also allows a debtor to reschedule secured debts (other than a mortgage for a primary residence) and extend them over the lifeline of chapter 13 plan.
Chapter 13 also has a special provision that protects third parties who are liable with the debtor on “consumer debts.” This provision may protect co-signers.
Finally Chapter 13 acts like a consolidation loan, where all the loans held by the debtor are consolidated into one single loan which needs to be paid to the trustees appointed by the bankruptcy courts.
Source:
http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter13.html
