Chapter 13 Bankruptcy in New York City

Chapter 13 under the U.S. Bankruptcy Code, also known as the “wage earner’s plan,” is available for individuals and married couples who have regular income and who would like to pay off their debts. When an individual files for Chapter 13, they are given the opportunity to create a repayment plan where they will make periodic installments to their creditors over a three or five-year period. This repayment plan not only allows the individual to slowly gain financial stability, but it also makes the process much easier. Instead of making separate payments to multiple creditors, the debtor makes one bulk payment to the trustee, who then disperses the funds to the appropriate creditors. The debtor is afforded an opportunity to repay either a percentage or all of their debts under better terms, such as lower or no interest.

The Chapter 13 Process

To commence a Chapter 13 case, an individual or a married couple would file a petition with the bankruptcy court in their district. Due to the complexity of the petition, schedules and plan it is recommended that you work with an experienced bankruptcy attorney (such as Robert M. Fox) during the process.

At The Law Offices of Robert M. Fox, we can review your financial situation and help to clarify the bankruptcy process for you, providing a clear step-by-step guideline for what to expect.

Between 21 and 50 days after the filing of your petition, you will attend a section 341(a) meeting of creditors. During this meeting, you will be placed under oath to answer questions from the trustee (and creditors who choose to attend). The trustee’s questions will focus on your financial affairs, as well as your proposed repayment plan. After the meeting, creditors will have 90 days and governmental units will have 180 days to file their claim.

Within 45 days of the meeting of creditors, you will be asked to attend a confirmation hearing in front of the bankruptcy judge to determine whether or not your repayment plan is feasible. Creditors will receive a 28 day notice of this hearing and are permitted to object to confirmation. Once the court approves your repayment plan, the trustee will start to distribute your monthly payments to your creditors appropriately. If the court does not approve the plan, you will be able to file a modified plan or may be given the option to convert to Chapter 7.

Qualifying For Chapter 13

Individuals and married couples are eligible for Chapter 13 life, even if self-employed or operating an unincorporated business; however, companies are not permitted to file for this chapter. For an individual to qualify for Chapter 13 relief, they must be under the following debt limits (which are periodically adjusted):

  • Unsecured Debt: Less than $360,475.00
  • Secured Debt: Less than $1,081,400.00

At The Law Offices of Robert M. Fox, we are proponents of bankruptcy because we believe in providing our clients with financial peace of mind. If you would like a more detailed explanation of what to expect under Chapter 13, or if you have specific questions, call us today for a free consultation! We are available from 9:00 a.m. to 5:30 p.m. on weekdays. We look forward to hearing from you soon!

Also known as “Adjustment of Debts of an Individual with Regular Annual Income,” Chapter 13 provides debt relief for individuals or consumers. Chapter 13 differs from Chapter 7 in the respect that it enables you to keep valuable assets, like a house, while making payments to creditors (through the trustee) based on your anticipated income over the life of the plan (usually three to five years). At a confirmation hearing, the court either approves or disapproves the plan.

Filing under Chapter 13 of the Bankruptcy Code affords you the opportunity to repay a percentage or 100% of your debts under better terms ( i.e. lower or no interest). In essence, a Chapter 13 Bankruptcy involves the restructuring of debts which allows you to use whatever disposable income you may have in the future to pay off your creditors. Filing Chapter 13 Bankruptcy is therefore appropriate for a debtor who has a regular income, and thus can afford to request such adjustments or reductions.

The United States Bankruptcy Code gives you a ceiling of 5 years, within which your creditors must be paid back. While your attorney will safeguard your interests, the entire process is carried out under the supervision of the courts.

While debtors are allowed to keep all of their property, the court approves a new interest-free plan for repayment. A written plan is created giving details of all the scheduled payments that will occur, and the duration of the same. The repayment generally begins within 30-45 days after the case is filed. Usually, monthly payments are made directly to the appointed trustee who then disburses the money to the creditors as per the plan. Also, as per the law, the creditors must strictly adhere to the repayment plan approved by the court and are in fact prohibited from collecting on any claims from the debtor.

Another advantage of a Chapter 13 filing is that a repayment plan can be confirmed even if creditors are not in accordance with the terms of the plan. The creditors may object, but the court decides if such objections are merit-based.

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