The Law Office of Richard S. Feinsilver
A New York Bankruptcy Law Firm

Facts About Chapter 13 Bankruptcy in New York

If you have current monthly income that precludes you from qualifying under the Means Test for Chapter 7 bankruptcy, or if you are in foreclosure, the Law Office of Richard S. Feinsilver can help you file a petition for protection under Chapter 13 of the U.S. Bankruptcy Code.

In the past, Chapter 13 bankruptcy was primarily utilized by residential homeowners (including co-ops and condos) who were in foreclosure to allow them to repay their mortgage arrears as well as all, or a portion of, their unsecured debts under the supervision and protection of the United States Bankruptcy Court.

While foreclosure remains the primary reason to file for Chapter 13 bankruptcy, individuals who may not be homeowners, or homeowners who are current on their mortgage obligations, but have incomes above the median income in New York and may not be eligible to file a petition for Chapter 7 bankruptcy can file a petition for Chapter 13 bankruptcy to effectively deal with their debts.

Chapter 13 bankruptcy is designed for working people with steady incomes who want to pay their debts but are currently overwhelmed with bills, judgments, lawsuits, and other financial issues. Even if you do not own a home, the filing of a Chapter 13 bankruptcy petition can assist you to regain control of your financial situation.

A Chapter 13 bankruptcy plan allows an individual to repay mortgage arrears and some, or all, other their other debts (such as credit cards, medical bills, etc.), over a three to five year period. While a Chapter 13 plan is in effect, creditors cannot either start or continue their collection efforts, and they must accept what the plan pays them. Any individual, or married couple, even if self-employed, can receive Chapter 13 relief if they owe less than $1,010,000.00 in secured debt (i.e. mortgages, car loans, equity loans), and less than $310,000.00 in unsecured debt.

Upon the successful completion of a Chapter 13 repayment plan, the debtor receives a Certificate of Completion and Discharge, which extinguishes all obligations to make further payment toward their unsecured debts, even though these creditors may not have been paid in full. In fact, many people repay their unsecured creditors no more than 10, 20 or 30 percent of the total amount owed. Chapter 13 has also helped to save the homes of thousands of Americans every year.

Whether or not you own a home, or you are in foreclosure, Chapter 13 Bankruptcy is a more efficient and effective manner to deal with your debt than debt consolidation. Are you being bombarded by advertisements from so-called Debt Consolidation companies alleging that they can assist you? While most of these advertisements sound promising on the surface, and some companies provide some valuable services, but did you know that...

- Debt Consolidation companies are actually telling you - indirectly - to intentionally damage your credit. They represent that they will begin to contact your creditors immediately, and begin to work out payment arrangements, but in actuality, in many instances, you are still being dunned by your creditors and collection agents and remain at risk of having litigation commenced against you and/or the enforcements of judgments that may have already been entered against you!!

- Many creditors do not discuss work out payment arrangements with consumers who pay on time. In many instances, creditors will not even begin to consider adjusting payment terms in any manner whatsoever until an account is at least 60-90 days behind.

- Debt Consolidation companies are only interested in collecting their fees. Many Debt Consolidation Companies will ask you to immediately begin to remit monthly payments to them. These payments are not going to your creditors!! Debt Consolidation companies "front end load" their fees so they ensure that they get paid regardless of whether or not they produce any results!!

- Many Debt Consolidation companies and Not-For-Profit Credit Counseling Agencies are paid by the credit card companies for the money that they collect on your behalf in addition to the fees that you are already paying them

- Although many companies do not directly disclose it directly in their advertising, there is no guarantee that all of your creditors will deal with Debt Consolidation companies. From the onset, there are numerous creditors that absolutely will not deal with Debt Consolidation companies.

- Debt Consolidation Companies may not even be able to lower your payments at all, and in fact, may ask you to pay a higher amount!!

Using Chapter 13 bankruptcy as a pure Debt Consolidation tool is fairly straight forward. Chapter 13 bankruptcy can be viewed as personal reorganization. In a Chapter 13 bankruptcy proceeding, you deal with ALL of your debt obligations at once. Bankruptcy is not a "pick and choose" process. The law requires you to deal with all of your creditors and your creditors must deal with you.

Creditors have no choice when you file a Chapter 13 bankruptcy petition. They must comply with the requirements of the law. In Chapter 13 bankruptcy, your repayment plan is not based upon what the creditors want or may be willing to accept. Your monthly payment shall be based on what your individual circumstances allow you to safely afford within the guidelines set down in the Federal Bankruptcy law. This amount is determined by the Means Test.

The Means Test has been designed to determine what may be a fair and reasonable amount to be repaid to your creditors based upon income and expense guidelines based the size of your household and where you reside.

In Chapter 13 bankruptcy, you are in control of your financial situation. The filing of a Chapter 13 bankruptcy case is purely voluntary. You are actually proposing your own repayment plan within the guidelines set down in the law. So long as the plan of repayment that you propose is in compliance with the Bankruptcy Code - your creditors have no choice and must accept the repayment terms that you have proposed.

If you live in New York's Kings (Brooklyn), Queens, Nassau, or Suffolk (Long Island) counties, and need the advice of an experienced bankruptcy attorney, contact the Law Office of Richard S. Feinsilver. Our bankruptcy attorneys can help you determine if a Chapter 13 bankruptcy filing is right for you. Don't let a growing mountain of debt keep you from achieving your life's goals.