While your financial situation may seem bleak because you are burdened with substantial debt and are unable to meet your monthly payments, under New York law there are options that will help make your debt payments more manageable. One such option is to file for bankruptcy. There are 2 types of personal bankruptcy options: chapter 7 bankruptcy and chapter 13 bankruptcy. Chapter 13 bankruptcy is also referred to as reorganization bankruptcy as it requires you to restructure the payments terms you have with your creditors in order to pay off your debt more quickly based on manageable payment terms. Unlike chapter 7 bankruptcy, chapter 13 does not necessarily result in the vast majority of your debt being immediately eliminated. If you are dealing with overwhelming debt, chapter 13 bankruptcy is one of several options to consider to help you manage the debt. Other options include chapter 7 bankruptcy, debt consolidation and debt settlement. Such options may help you avoid foreclosure, garnishment, and bank account levy. They will also help stop constant calls from debt collectors. If you are trying to figure out how to eliminate substantial debt, it is important to immediately contact an experienced Suffolk County Chapter 13 Bankruptcy Lawyer who understands the complexities of federal and state bankruptcy laws and who will explain your options for managing your debt.
Qualifying for Chapter 13 Bankruptcy. Based on 11 U.S. Code Chapter 13, not everyone who feels overwhelmed by debt will qualify for a chapter 13 bankruptcy. Chapter 13 bankruptcy requires that you have sufficient income to pay some or all of your debt. Thus you must prove that you will be able to make regular installment payments. If your income is too low, you will not be permitted to file for chapter 13. In determining whether you have sufficient income for a chapter 13 bankruptcy, your income is not only your paycheck from your employer, but also self-employment income, pension income, social security benefits, disability payments, unemployment benefits, public benefits, spousal support, and proceeds from selling property.
In addition, if you have too much debt you will not be permitted to file for chapter 13 bankruptcy. Your secured debt cannot exceed $1,149,525 and your unsecured debt cannot be more than $383,175. These amounts are adjusted periodically. A secured debt is one that involves collateral. For example, if you have an auto loan from an auto dealer or a finance company, the vehicle you purchased with the loan would be the collateral and the car loan would be considered secured debt.
If you do not qualify for chapter 13 bankruptcy, you may qualify for chapter 7 bankruptcy.
Pre-Bankruptcy Credit Counseling. Before filing for bankruptcy, the law requires that you attend credit counseling. This pre-bankruptcy credit counseling must occur within 6 months prior to filing. The counseling session must be with a credit counseling organization approved by the U.S. Trustee Program. The session will include an evaluation of your personal financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan. The goal of credit counseling is to help you to manage your finances well throughout the bankruptcy process as well after bankruptcy.
Chapter 13 Bankruptcy Process. Once credit counseling has been completed, the formal chapter 13 bankruptcy begins with filing a chapter 13 petition with the Bankruptcy Court in your area. No later than 15 days after filing the petition, you must submit a proposed payment plan. Your proposed plan will include a schedule of installment payments that will last between 36 and 60 months. The next step is that you will meet with your creditors. Not all of your creditors will attend the meeting. However, the meeting is an opportunity for the creditors that do attend to ask you questions regarding your financial situation.
There will then be a hearing in the Bankruptcy Court. The judge will review your proposed plan, determine if it is reasonable and if it meets the standards set forth in the bankruptcy code. Your creditors are allowed to attend the hearing and they can object to your plan. If the Bankruptcy Court approves your plan, you then must start making payments according to the terms of the plan.
Chapter 13 bankruptcy is a complicated process requiring an understanding of both federal bankruptcy law and any applicable state regulations. Failure to follow the technical requirements of the federal tax laws may result in your case being dismissed. The staff at Stephen Bilkis & Associates, PLLC has extensive experience helping clients eliminate secured and unsecured debt, responding to creditors' claims, filing for chapter 7 and chapter 13 bankruptcy, avoiding foreclosure and dealing with out issues related to debt relief. Contact us at 800.696.9529 to schedule a free, no obligation consultation regarding your debt issues.