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Chapter 13 Bankruptcy in Long Island, NY

Would you like to put an end to creditor harassment, wage garnishment, repossession, and freezes on your bank accounts? Would you like to save your home from foreclosure? Chapter 13 bankruptcy may be a worthwhile option for you if you have a steady income but have found yourself over your head in debt.

By filing for bankruptcy under Chapter 13 of the Bankruptcy Code, your assets and property are not liquidated as they are in a Chapter 7 bankruptcy. Chapter 13 can protect your assets and can also be helpful in staying or preventing foreclosure. Chapter 13 is also referred to as "Individual Debt Adjustment" or "wage earner's plan." Approximately one in three bankruptcies filed in the United States are filed under this chapter.

What is Chapter 13? Am I Eligible?

Chapter 13 enables a debtor to keep property and pay his or her debts over time (usually 3 to 5 years). During that time, creditors are unable to pursue collections on the debts they are owed. When the Chapter 13 is successfully completed, all eligible debts will be discharged. When a person files for Chapter 13, his or her excess income will be determined and this amount will be paid monthly to a Chapter 13 bankruptcy trustee who will distribute this money to creditors. For example, if you make $5,000 per month and spend $4,400 on living expenses, your surplus would be $600. This is the amount you would pay in order to be applied to your debts.

To be eligible to file under Chapter 13 of the Bankruptcy Code, you must have less than a certain amount of secured or unsecured debt. To learn if you are eligible, contact an attorney at Jacoby & Jacoby for a consultation. Additionally, you must have received credit counseling within the past 180 days from an approved agency. Any individual who qualifies may petition for Chapter 13, even if he or she is self-employed or operating an unincorporated company. Corporations and partnerships do not qualify to file for bankruptcy under Chapter 13.

The Benefits of Chapter 13 vs. Chapter 7

Chapter 7 bankruptcy results in a liquidation of a person's assets and property. Chapter 13, however, offers protection of a person's assets and also enables foreclosure proceedings to be stayed (stopped or delayed). Chapter 13 is often a better option for cosigners, offering them more protection than Chapter 7. Under Chapter 13, you will no longer receive any direct contact from creditors, in the form of harassment, lawsuits, wage garnishment, freezes on your bank accounts, repossession, etc. Instead, you will have what acts like a consolidation loan, wherein you pay a single payment which is then distributed between creditors. And when your Chapter 13 payment plan is completed, any remaining debt will be discharged.

A lawyer can help you determine whether Chapter 13 is actually the right option for you. No two people are in the same situation in regards to their finances, and thus it is important to have a lawyer review your particular circumstances to see what can and should be done.

Chapter 13 and Foreclosure in New York

In New York, Chapter 13 proceedings will automatically stay the foreclosure of your home. However, you must make all mortgage payments on time that are due during the duration of your Chapter 13 payment plan (which will usually last 3 to 5 years.) By successfully filing for Chapter 13 with the help of a lawyer, you could save your home from foreclosure!

Filing a petition for Chapter 13, and going through the following hearings and meetings in order to stay the foreclosure of your home, is complex and can be time-consuming. By working with an attorney, you can help ensure that your assets are protected and that the bankruptcy process goes as smoothly as possible.

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