To many in the state of New York, the issue of filing for bankruptcy is an intimidating one that they would rather not learn about unless they are required to. Although simple considering bankruptcy can be a stressful proposition, at certain times in your life it becomes necessary and, in many cases, beneficial.
Knowing the basic components of Chapter 13 bankruptcy will ensure that you not only understand the relevant details, you will also be prepared to take immediate and productive action if ever confronted with this financial legal situation.
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Knowledge on the subject, along with the right bankruptcy attorney to guide you through the process, will ensure that you are approaching a bankruptcy filing in the most efficient manner possible while lessening the possibility of issues arising during this complicated procedure.
What is Chapter 13 Bankruptcy?
According to the state of New York, Chapter 13 bankruptcy, also known as "Wage Earners Bankruptcy" is designed for individuals (and married couples) who are financially able to repay a portion of their debts over a specified period of time. This is the pathway for those whose income is too high to qualify for Chapter 7 bankruptcy (liquidation), or if they have property they need to protect.
In Chapter 13, you are able to keep your property, but must pay back a portion of your household debts over a three to five year period of time. In a sense, you can refer to Chapter 13 as a type of "debt consolidation" because your bills are combined together, in order to be whittled away in a systematic manner.
Individuals that most commonly file for Chapter 13 are those who:
•Own property or have debts such as student loans that are not exempt under Chapter 7
•Have past due balances on a mortgage or auto loan and would like to repay without the necessity for a repossession or foreclosure
•Have disposable income available to repay a portion of their debts over a three year period
As for those eligible for this classification of bankruptcy, they need a regular source of income, either through employment, operating a business, or other source, that meets the prerequisite amounts imposed by the state of New York. As of this articles release, income is separated into the following groups:
•One Person in Household, $46,295
•Two People in Household, $57,777
•Three People in Household, $68,396
•Four People in Household, $83,942
•For households exceeding four people, add $7,500 for each individual in excess of four
There are debt limitations for Chapter 13 bankruptcy. A person filing for Chapter 13 bankruptcy must have noncontingent, liquidated unsecured debts of less than $360,475 and noncontingent, liquidated secured debts of less than $1,081,400. The debt limits also apply to a joint Chapter 13 filing, i.e. the combined debts of husband and wife cannot exceed the amounts stated above.
With regard to repayment, the process involves making monthly payments to the designated bankruptcy trustee. The debtor is legally required to begin making payments within thirty days of filing the bankruptcy petition in New York. If collateral-secured loan payments, such as car payments or mortgage payments, become due after filing the bankruptcy case, the debtor must continue making these payments directly to the creditor.
After completing all required payments, the debtor will then receive a discharge if they can proved that: all domestic support obligations have been paid; that they have not received a Chapter 13 discharge within the past two years; that they have not received a Chapter 7 discharge within the previous 4 years; and that they have completed an approved financial management course.
After taking all of this information into account, you can confidently approach the situation in a productive and efficient manner, helping make this New York bankruptcy process much less stressful during what what has the potential to be a difficult time.
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