Why so many Chapter 13 cases?

For 2011, the overall number of bankruptcy cases has fallen from 1651 to 1567 for the first 5 months compared to 2010. The number of chapter 7 cases has fallen by 152 cases while the number of chapter 13 cases have increased by 64 in the same time frame. Why have the case filing moved from to 13 (HI bankruptcy statistics)?

My first guess would be the amount of mortgage defaults. The chapter 13 allows you up to 5 years to cure the arrears on your mortgage. It can also allow you to remove second mortgage and other junior mortgages from your residence or other properties. Often, eliminating junior mortgages and spreading out the arrears can bring an unaffordable mortgage back into reach. A chapter 13 bankruptcy can also get you more time to try and get a HAMP loan mod.

My other guess why chapter 13s are up is more people a filing bankruptcy less than 8 years after their previous filing. The minimum payment for a chapter 13 is $100 a month. If you are drowning in debt after your previous bankruptcy, the protection of bankruptcy in exchange for a monthly $100 payment to the court can be a good deal.

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