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Chapter 13 Bankruptcy New York

In contrast to a Chapter 7 Bankruptcy, in which you may eliminate most or all of your debts, in a Chapter 13 Bankruptcy, you pay some or all of your debts over a period of up to five years. Accordingly, Chapter 13 Bankruptcy is looked to for relief when Chapter 7 is not an option.

The following are reasons to file a Chapter 13 Bankruptcy. 1) You have too much income to file a Chapter 7. 2) You have fallen behind in mortgage payments and want to keep your home. 3) Your home is in foreclosure and you want to keep it. 4) You have property that is either non-exempt or exceeds permitted value limits and you want to keep the property. 5) You can’t file a Chapter 7 Bankruptcy, because you received a discharge under that chapter for which you filed less than eight years ago.

As in a Chapter 7 Bankruptcy, to file your bankruptcy under Chapter 13, you must complete the two classes in Credit Counseling and Personal Financial Management. Each class takes one to two hours and is offered by court-approved organizations, which charge a modest fee for the classes, usually $50 for each class. The classes may be taken in person, on the telephone, or on the Internet. The Credit Counseling class must be taken within 180 days preceding the filing of your bankruptcy petition. The Personal Financial Management class must be taken prior to the completion of your Chapter 13 plan.

In a Chapter 13 Bankruptcy, your creditors must fair no worse than they would have if you had filed a Chapter 7 Bankruptcy. For example, if you are $50,000 over your allowed exemption for your home, in a Chapter 7 Bankruptcy your creditors would have received $50,000 from the sale of that home. Accordingly, in a Chapter 13 your creditors must be paid $50,000 under the terms of the payment plan. This assumes that you have at least $50,000 in unsecured debts.

In addition, secured loans, for example on your home and car, must be brought current and paid on time during the payment plan. In addition, you must pay unsecured creditors, such as banks that issue credit cards, either in full or in part during the payment plan. The amount that unsecured creditors receive depends upon your individual circumstances.

In a Chapter 13 Bankruptcy, a payment plan is made for payments over a period of time, which may be as long as five years. Debts that are not dischargeable may still be paid under the plan. This may help with debts that cannot be eliminated in a Chapter 7 Bankruptcy, such as taxes and student loans. To qualify for a Chapter 13 Bankruptcy, you must have enough income to pay your living expenses and payments under the plan. There are also limits concerning the amount of debts that can be processed in a Chapter 13 Bankruptcy. Currently, the total amount of unsecured debts, such as credit card debts and personal loans, may not exceed $336,900, and the total amount of secured debts, such as mortgages and auto loans, may not exceed $1,010,650. These amounts are periodically increased. If your debts exceed these amounts, you may be able to file a Chapter 11 Bankruptcy.

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Procedure & Cost

As in a Chapter 7 Bankruptcy, during our free consultation, we will review your situation and advise you of your options and of our fees. Our fee for a Chapter 13 Bankruptcy is usually between $2,500 and $3,500. The exact amount will depend upon the following factors: whether you have previously filed for a Chapter 13 Bankruptcy; how much you owe; the types of debts; what type of property you have; whether you are self-employed; and whether you are filing with your spouse. In addition to our legal fee, you must pay $274 for the court filing fee and $35 for a credit report (combined from all three major credit reporting agencies). In addition, you must pay $100 to the organization that provides the two required classes. At the end of our free consultation, you will know exactly what the Chapter 13 Bankruptcy will cost.

If you wish to retain our office with regard to a Chapter 13 Bankruptcy, you will sign a retainer agreement and pay a deposit, also known as a retainer fee, of $500. After your first payment, you must pay us at least $500 per month until the balance of our fee is paid in full. Once you have retained our law office, you may tell your creditors that they must call us and not you.

When you have finished paying us, you will need to complete the Debtor Counseling class, which may be taken in person, over the telephone or on the Internet. Once you have completed that class, we shall prepare your petition and file it with the Court. The moment we file your bankruptcy petition with the Court, an automatic stay will be issued that will stop your creditors from taking any collection and legal actions against you. That means, if your house is being foreclosed, your wages are being garnished or your bank accounts have been frozen, the creditor must stop those actions. If any money is taken from you once we file your petition, the money must be returned to you. Once we file your petition, you must begin making your payments under Chapter 13.

In a Chapter 13 Bankruptcy, there are two different types of hearings you will be required to attend. As in a Chapter 7 Bankruptcy, there is a “Meeting of Creditors.” This is a bit of a misnomer, since creditors rarely appear. The second type of hearing, which does not occur in a Chapter 7 Bankruptcy, is called a “Confirmation Hearing.”

Once your petition is filed, you should take your second education class, which is called Personal Financial Management. The deadline to take this class is prior to the completion of your Chapter 13 plan.

The Meeting of Creditors will take place about one month after the filing of the petition. At this hearing, you will be questioned by the bankruptcy trustee, who is an attorney paid to handle your petition. You will be questioned regarding your assets and your debts. The questioning usually takes from 5 to 10 minutes. We will prepare you for the questions that will be asked and be at your side during the hearing. If the bankruptcy trustee is satisfied and has no further questions, he or she will “close” the meeting. However, if the bankruptcy trustee has further questions, a second hearing will be scheduled to occur approximately two weeks later

After the Meeting of Creditors, the Confirmation Hearing will be held. At this hearing, assuming that the bankruptcy trustee is satisfied with your proposed payment plan, he or she will approve your plan. Once you have completed all of your payments under the plan, you will receive a discharge. This document, along with your bankruptcy petition, will be proof that you are no longer responsible for your discharged debts.

If needed, you may file a Chapter 7 upon the conclusion of a Chapter 13 Bankruptcy. This may be needed if you do not complete the payments that are required in your Chapter 13 Bankruptcy. Also, it’s reassuring to know that you have the option of looking to Chapter 7 for relief after Chapter 13 in the event you experience further financial difficulties.

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We are a federally designated Debt Relief Agency under the United States Bankruptcy Laws. We assist people with finding solutions to their debt problems, including, where appropriate, assisting them with filing bankruptcy.

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