Filing Chapter 13 in New York

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If you are thinking about filing for bankruptcy in New York, but are worried about how a bankruptcy will affect your assets, consider filing for Chapter 13 bankruptcy. Unlike Chapter 7, Chapter 13 bankruptcy allows a debtor to pay off debts under an installment plan administered by a bankruptcy trustee.

Chapter 13 Bankruptcy in New York

If a debtor has regular income for at least six months prior to filing for bankruptcy, the debtor may be eligible for Chapter 13 bankruptcy. Income can come from almost any source as long as it is regular and the debtor can document the income. For example, the income could come from a retirement account or social security benefits. In addition to filing the bankruptcy petition, within 15 days of filing for Chapter 13 bankruptcy, the debtor must submit a repayment plan.

The repayment plan does not discharge the debtor’s unsecured debt immediately, but allows the debtor to develop a three to five year plan to repay the debt. The debtor, with the help of an attorney, will develop a plan that the debtor can afford. The debtor’s attorney will create a plan based on the debtor’s income and monthly expenses. Next, the bankruptcy court must confirm the debtor's repayment plan at the confirmation hearing. The debtor’s creditors may also appear at the confirmation hearing and file an objection to all or part of the debtor’s repayment plan.

As in Chapter 7 bankruptcy, a debtor must complete a credit-counseling course within 180 days of filing for bankruptcy. The credit-counseling course takes about an hour and can be completed online, over the phone or in person. The debtor will receive a certificate of completion at the end of the course. The debtor must submit the certificate of completion along with the bankruptcy petition at the time of filing for Chapter 13 bankruptcy.  

Chapter 13 Discharge

It is the Chapter 13 bankruptcy trustee’s duty to ensure that the debtor makes all monthly payments directly to the bankruptcy trustee. After receiving the funds each month, the bankruptcy trustee distributes it to the debtor’s creditors. If the debtor makes all monthly installments on time and in full, and completes the repayment plan, the debtor can receive a bankruptcy discharge. All debts included in the repayment plan will either be paid or discharged.

A debtor must also complete a debtor education course before receiving a bankruptcy discharge. The debtor education course is similar to the credit-counseling course the debtor took prior to filing for bankruptcy; however, the debtor education course helps the debtor create a financial plan after the bankruptcy is complete. The debtor will receive a certificate after completion of the course. The debtor should submit the certificate to the bankruptcy court.

Getting Legal Help

If you have questions about filing for Chapter 13 bankruptcy in New York, contact an experienced bankruptcy attorney. An attorney can explain the bankruptcy process to you and help you file a bankruptcy petition.