New York Chapter 13 Bankruptcy
What Can Chapter 13 Bankruptcy Do For Me? Chapter 13 bankruptcy is about getting back in control of your financial life. Chapter 13 is a monthly payment plan that allows you to pay back what you can afford to pay back and eliminate unsecured debt that you cannot afford to pay back. In 2005 Congress enacted some restrictions on who may qualify for chapter 7 bankruptcy, namely income restrictions (the Means Test). So, if you make too much money to qualify for chapter 7 bankruptcy and fully eliminate your debt, chapter 13 bankruptcy is an option to get back in control. Also, in chapter 13 bankruptcy, you have more options for dealing with certain types of debt like car loans and second mortgages.
Why do I say chapter 13 bankruptcy is about CONTROL.
You pay back only what you can afford; your monthly payment is based on your income minus ALL living expenses. Instead of a monthly payment dictated by your creditors (your monthly minimum), you dictate to your creditors how much you can afford to pay back,
- Creditors must participate; your creditors cannot opt out; if a creditor opts out, its debt is simply discharged,
- You create a budget that meets both your living expenses and pays something to your creditors,
- The payment plan only lasts 36-60 months,
- At the end of the chapter 13 payment plan; any debt still unpaid is eliminated, i.e. discharged.
No other debt solution accomplishes what a chapter 13 can accomplish; no other debt solution gives you as much control over your creditors as a chapter 13 bankruptcy.
Also, chapter 13 bankruptcy has specific uses not available in chapter 7 bankruptcy.
- Rescue your home from foreclosure.
- Rescue your car from repossession.
- Pay back certain debts, like tax debt, ahead of other debts.
Chapter 13 bankruptcy is designed for higher income families and individuals who need to get back in control of their debt; also chapter 13 is a strategy to achieve certain specific goals such as allowing you to keep your home after you have fallen behind on payments.
Can I save my home from foreclosure with chapter 13 bankruptcy?
Yes, chapter 13 allows you to pay back your missed mortgage payments in the chapter 13 payment plan thereby rescuing your home from foreclosure. The only caveat is that you must be in a position to make your regularly scheduled mortgage payment on the next due date after your chapter 13 bankruptcy is filed; and the chapter 13 bankruptcy must be filed before the foreclosure sale date.
Can I Keep unprotected (non-exempt) property in chapter 13 bankruptcy?
Yes. In fact, chapter 13 is the primary bankruptcy strategy for those who have too much equity in assets to successfully file chapter 7 bankruptcy without losing necessary items. Reason being, chapter 13 is more concerned about your income and expenses, not your stuff. So long as the total of your monthly payments over the life of the plan equals the value of the unprotected equity, you keep your stuff.
For example, let’s say Mr. Jones in New York has certain equipment for his construction business and a motorcycle that combined, have $40,000 equity above his states exemption. Mr. Jones needs the equipment to run his business and like most motorcycle owners, is not willing to part with the bike. Thus, so long as Mr. Jones can afford to pay at least $40,000 over 60 months in a chapter 13 bankruptcy, he can keep those items.
How do I qualify for chapter 13 bankruptcy?
- Be a natural person, meaning business entities such as LLC’s, partnerships, and Corporations cannot file Chapter 13 bankruptcy
- Have a source of reliable, regular income. That is a broad definition, it doesn’t necessarily mean employment income; but any source of revenue that is regular and reliable will do,
- Have some amount of disposable income, you need some demonstrable way to afford some amount of a monthly payment,
- Your total unsecured debt is less than $360,475,
- Your total secured debt is less than $1,081,400
- To receive a chapter 13 discharge, you cannot have received a discharge in a prior bankruptcy filed in the previous 4 years.
Give New York Lawyers Team a call today to learn more and discuss your options for Chapter 13 bankruptcy.