If you are struggling financially, you are far from alone. Many individuals, families, and small businesses across the country have found themselves in debt, causing them to experience stress, anxiety, and even a sense of hopelessness. Unfortunately, many people with significant debt feel embarrassed or ashamed about their economic situation, and they may feel too paralyzed to take the necessary steps to regain control of their finances. Bankruptcy offers debtors a path forward, but the process may seem too intimidating or costly to explore. Enlisting the support and guidance of an experienced and compassionate New York bankruptcy attorney can give you the clarity and confidence you need to navigate every step of this process. This post will explore the benefits of filing for Chapter 13 bankruptcy relief in Auburn, New York, and encourage you to reach out to a dedicated bankruptcy attorney to discuss the specifics of your situation.
What is Chapter 13 Bankruptcy?
Also called a wage earner’s plan, Chapter 13 bankruptcy allows individuals with steady incomes to establish a repayment plan to address their debts. You can create and present a repayment plan to pay back a percent of your unsecured debt over a three- to five-year period. After the repayment period, the remaining dischargeable unsecured debt is wiped away. When you file a Chapter 13 bankruptcy, the court will appoint an impartial trustee to administer your case. You will be required to attend a meeting of creditors (court hearing over the phone), during which the trustee and your creditors may ask you questions about your debts and your proposed repayment plan (it is rare that creditors appear). Over the course of the repayment plan, the trustee will collect your payments (usually on a bi-weekly or monthly basis) and distribute them among your creditors. As long as you fulfill the terms of your repayment plan, the court will discharge (wipe away) your remaining debt once the period has ended.
Advantages of Chapter 13 Bankruptcy in Auburn, New York
Most individuals with debt have two main bankruptcy filing options: Chapter 7 and Chapter 13. Chapter 7 bankruptcy, also known as liquidation bankruptcy, allows debtors to wipe away their unsecured debt without paying back creditors. The court will wipe away your unsecured dischargeable debts and allow you to start rebuilding your credit and regain control of your financial situation. While Chapter 7 bankruptcy cases resolve fairly quickly (most take about three months to complete), you may find that Chapter 13 bankruptcy addresses your needs more directly. Here are some of the advantages of pursuing Chapter 13 relief over Chapter 7.
Saving Your Home From Foreclosure
One significant benefit of filing for Chapter 13 bankruptcy is the ability to stop a mortgage and/or tax foreclosure proceeding. Once you’ve filed the bankruptcy petition with the court, this triggers an automatic stay against any foreclosure activity. You will restart making your regular monthly mortgage and/or property tax payments, and all the arrears that are owed will be paid back over a three- to five-year repayment period.
Those Ineligible For Chapter 7 Relief May Qualify For Chapter 13
There are strict eligibility requirements for those pursuing Chapter 7 bankruptcy relief. If you fail the means test (takes the last six months of gross income and multiples by two), meaning your current monthly income exceeds the median income (based on your household size), you will likely be unable to pursue relief under Chapter 7. In contrast, there is no income threshold for Chapter 13 relief as long as you meet a few additional criteria. For instance, you may not be able to file under Chapter 13 if a prior bankruptcy petition was dismissed within the preceding 180 days. You must also receive credit counseling (an online class) from an approved agency within 180 days before filing your Chapter 13 petition. Essentially, Chapter 13 works well for those with a steady income.
A Stable and Steady Process
Although the repayment period takes a few years to complete, the process allows you more time to assess and regain control of your finances than the Chapter 7 process does. You’ll have the opportunity to establish a workable repayment plan, providing you with the structure you need to get your finances back on track. You will also start rebuilding your credit while you are in the repayment period; you do not have to wait until the end of the Chapter 13 bankruptcy. At the end of the repayment period, the court will discharge the remaining debts, and you can finally move forward with greater stability and confidence.
Compassionate Legal Guidance at Every Turn
Struggling with debt can wreak havoc on your life. If you are constantly worried about how you’ll ever be able to crawl out of debt, you are not alone. However, things will not change unless you start to explore your debt-relief options and take the necessary steps to regain control of your economic situation. First, reach out to a knowledgeable and compassionate bankruptcy attorney to discuss your struggles. An experienced New York attorney will listen to your concerns without judgment, as their primary goal is to help you obtain the financial “fresh start” that you deserve. Together, you can identify the most appropriate course of action and move through the process side by side.
