If you are feeling overwhelmed with debt, you’re not alone. Most people who come in to see us are not only behind on credit card debts but also falling behind on their rent, mortgage, or car payments. Others are behind on their student loans or owe taxes to the IRS or State. When this is the case people often turn to Chapter 13 bankruptcy for help.
Bankruptcy can be confusing for anyone unfamiliar with what it is or how it works. Dantzman & Dantzman has helped countless individuals and families obtain successful, court-approved Chapter 13 plans. If you’re unsure if this option is right for you, here are answers to 4 common questions about New York Chapter 13 bankruptcy.
What is New York Chapter 13 Bankruptcy?
Chapter 13 is a type of reorganization/consolidation in which a debtor restructures all of their debts. In most cases, the focus is on protecting your important assets, like your house and car, and unsecured debt is paid off, typically at pennies on the dollar based on your assets and income. In a typical Chapter 13 case, you make a plan to get caught up on any past due mortgage, rent, or car payments, and also consolidate any other debts, such as credit cards, medical bills, and past due utility bills, to name a few, which are paid back, typically at pennies on the dollar. You make one payment each month on these consolidated debts, typically over a three to five-year period. At the end of the restructuring plan certain balances, such as unpaid credit card debts are typically forgiven and permanently wiped away.
Who Should Consider Filing a Chapter 13 Bankruptcy Plan?
Clients file Chapter 13 for many different reasons. Some clients just want to consolidate their debts in a court-approved, organized, and affordable fashion. They find these plans vastly superior to other “debt consolidation” types of programs that offer no legal protections and often create more headaches in the end. Chapter 13 is also a good option for people who own too many non-exempt assets and do not want to risk losing them in a liquidation-type bankruptcy, or for someone who is behind on their mortgage or car payments, or whose income exceeds the allowable limits for eligibility f you fear you may lose your house or car because of financial hardship, Chapter 13 can give you the time you need to catch up on payments and even start rebuilding your credit.
It’s always best to first consult with an experienced bankruptcy lawyer who can help provide you with a successful Chapter 13 plan.
Can Creditors Contact Me While I am in a Chapter 13 Bankruptcy?
Filing a Chapter 13 petition stops pending foreclosures and payments of any other debts owed. Once the repayment plan is in place, creditors generally are prohibited from collecting debts directly from the debtor. Instead of paying your creditors directly, you will pay your Chapter 13 trustee monthly. The trustee then takes this payment and disburses it to your creditors. When the last payment is made, the debtor receives a successful discharge for the remainder of their dischargeable debts.
What is the Difference Between Chapter 13 & Chapter 7?
In New York, there are two major types of consumer bankruptcy: Chapter 7 and Chapter 13. The main difference between Chapter 7 and Chapter 13 is in the handling of the debtor’s property. A Chapter 7 bankruptcy offers the discharge of debts (with the exception of certain tax liability, student loans, and child support obligations) without any payments being made to creditors. Conversely, Chapter 13 bankruptcy requires the debtor to repay at least some of their debts over time through a repayment plan rather than wiping them all out, as in a Chapter 7 bankruptcy.
Dantzman & Dantzman Can Help You File For Chapter 13 Bankruptcy
Have more questions about New York Chapter 13 bankruptcy? At Dantzman & Dantzman, we have helped countless clients navigate bankruptcy filing and get the most out of their repayment plans. We can answer your questions to help you gain a better understanding of the bankruptcy process and make sure your Chapter 13 plan is successful.
For more information or to schedule a free initial consultation with an experienced bankruptcy lawyer, contact Dantzman & Dantzman today. You will be glad you did.