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What is Chapter 13 Bankruptcy?

Upstate New York Chapter 13 Bankruptcy Law Attorney

Reorganize Your Debt by Filing Chapter 13 Bankruptcy.

Chapter 13 bankruptcy provides a process for repaying some or all of your debts by making monthly payments to a trustee who, in turn, will distribute those payments to your creditors. Chapter 13 plans usually run three to five years.

Why file Chapter 13?

Chapter 13 is not for everybody, but in certain circumstances you can accomplish things in Chapter 13 that you can't do in Chapter 7:

  • Chapter 13 can stop foreclosures and save your house
  • For high income families, Chapter 13 can provide bankruptcy relief if they are not eligible for Chapter 7
  • If you have certain debts you can't pay outside of bankruptcy and which cannot be eliminated in Chapter 7 (for example, income taxes), Chapter 13 provides a process for repaying those debts
  • Chapter 13 provides a way to repay your debts if you want to pay your creditors but can't do so outside of bankruptcy due to creditor harassment or lawsuits
  • If you have unexempt assets that you might lose in a chapter 7, you can keep the assets and pay their value to creditors in chapter 13

Stop Foreclosure ▪ Lower Your Monthly Payments ▪ Meet Your Obligations

I am bankruptcy lawyer Peter R. Scribner of Rochester, New York. If you are starting to feel the pressure of a heavy burden of debt, filing Chapter 13 bankruptcy may be the answer you are seeking.

I have more than 20 years of upstate New York bankruptcy law experience.

I have focused exclusively on the practice of bankruptcy law for more than 20 years. Contact my office for a free telephone consultation about your specific circumstances. I will give you clear answers about your bankruptcy options and help you decide what you can do to get a new start from overwhelming debt.

Chapter 13 and foreclosure: If you are behind on your mortgage, chapter 13 may provide a way to catch up, if you cannot modify your mortgage or settle with the mortgage bank. In Chapter 13, you can pay off the amount you are behind on the mortgage by making monthly payments to the bank through a chapter 13 plan. You have to be in a financial position to resume your regular mortgage payments directly to the bank, and pay off the mortgage arrears through a chapter 13 plan, over three to five years. Chapter 13 does not modify the mortgage (you cannot reduce the interest rate or the balance in chapter 13), but it does provide a way to pay off the arrears.

Chapter 13 and non-dischargeable debts: Some debts cannot be discharged in bankruptcy, such as recent taxes, child support, and student loans. Chapter 13 can provide a way of paying off these debts through a chapter 13 plan, which can last up to five years. If creditors are threatening you with seizure of assets or income, chapter 13 may be a convenient way of repaying these debts.

Chapter 13 and high income: Some debtors have too high an income, compared to their necessary household expenses, to qualify for a chapter 7. If they need to file bankruptcy to stop creditors from seizing assets or income, chapter 13 may be the way to go. If your debts are so high that you cannot pay them off in full in chapter 13, you may possibly file a plan that calls for a partial payment of unsecured debts. Above-average income cases are complicated and require very careful bankruptcy analysis.

Chapter 13 and unexempt assets: When you file a bankruptcy, certain assets are 'exempt'; that is, you can keep them free and clear of the bankruptcy trustee. See my New York Exemption page for more information on exemptions. If you have assets that are not exempt, a chapter 7 bankruptcy trustee may require that you turn them over so that they may be sold and funds paid to creditors. In chapter 13, it is possible to keep these unexempt assets IF the debtor pays the creditors the value of the asset through the chapter 13 plan.For example, say a debtor is using the New York exemptions and has a car worth $10,000, with no loan, and can only exempt $4,000 under New York's motor vehicle exemption. In chapter 7 the debtor would have to pay $6,000 to the trustee, or lose the car. In chapter 13, the debtor can pay the trustee $6,000 over the term of a chapter 13 plan, three to five years. The creditors will receive the same amount of money, and the debtor gets to keep the car.

Chapter 13 is very complicated. If you are considering chapter 13, you need expert and experienced bankruptcy advise. Please contact my office for a free phone consultation if you need to know more about chapter 13.