Struggling with debt can be a stressful and even shameful experience. It’s common for individuals who have accrued large amounts of debt to feel isolated and uncertain about the future. However, it’s essential to recognize that you are far from alone in this situation—you have options for seeking and obtaining the fresh financial start you need to feel hopeful about the future once again. If you are curious about your debt-relief options in Auburn, New York, reach out to an experienced and compassionate bankruptcy attorney to discuss your unique situation. Your attorney will treat you with the care and respect you deserve during this stressful time and guide you through each step of the Chapter 13 bankruptcy filing process. Together, you can identify the most strategic and efficient path forward that allows you to hold your head higher and face the future with confidence. Let’s take a look at how Chapter 13 bankruptcy relief works in New York and what you can expect from the process.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy, also known as a “wage earner’s plan,” allows individuals with a regular income to establish a repayment plan to pay back their debts over a period of three to five years. This debt-relief option works well for those individuals whose income exceeds the threshold for qualifying for Chapter 7 bankruptcy relief. While it takes longer to receive a discharge under Chapter 13 than Chapter 7, the petitioner is able to save their homes from foreclosure and address delinquent mortgage payments over time. Once the repayment period concludes, the court will discharge the remaining debts owed to creditors. However, it’s important to recognize that certain debts are not dischargeable under Chapter 13, such as alimony or child support obligations, certain taxes, and student loans.
Qualifying For Chapter 13 Bankruptcy in Auburn, New York
There are certain eligibility requirements a petitioner must meet in order to qualify for relief under Chapter 13. First, the individual’s combined total secured and unsecured debts must be less than $2,750,000. A person may not file for bankruptcy under Chapter 13 if the court dismissed a previous bankruptcy petition within the last 180 days because the petitioner failed to appear before the court or comply with the court’s orders. The petitioner must also attend a mandatory credit counseling course from an approved agency within 180 days of filing the petition. Navigating these eligibility requirements can be overwhelming and confusing, so consider enlisting the guidance and support of a trusted attorney to help you understand and identify the most appropriate path forward.
What to Expect When Filing a Chapter 13 Bankruptcy Petition
Once you’ve decided to file a Chapter 13 bankruptcy petition, it’s natural to wonder what steps await you. Although some petitioners decide to navigate this process on their own, enlisting the support of an experienced bankruptcy attorney is highly recommended. Your lawyer can explain the upcoming steps and answer your questions along the way, enabling you to face the future with greater clarity and confidence. Below is a brief overview of some steps you can expect during the Chapter 13 bankruptcy filing process.
Filing the Chapter 13 Bankruptcy Petition
Once you have located all the necessary information and attended the credit counseling session, you can file a petition for bankruptcy. You can complete this form and submit it to the court, along with any required documents (such as a list of assets, liabilities, expenses, bank statements, tax returns, paycheck stubs, and other relevant documents). You will also need to pay a filing fee. Once the court receives your petition, it will issue an “automatic stay,” preventing creditors from attempting to collect on the debts you owe them. Additionally, your creditors will not be able to file or continue a lawsuit against you, garnish your wages, or harass you for payment.
The Role of the Trustee
The court will appoint a trustee to oversee your case. First, the trustee will arrange a meeting of the creditors. During this meeting, you will be placed under oath and respond to questions from the trustee and your creditors. You will also discuss the details of the repayment plan. Soon after this meeting, the court will hold a hearing regarding the repayment plan and the repayment period will begin. The petitioner will submit regular payments to the trustee, who will then use these funds to pay creditors per the terms of the repayment plan.
Obtaining a Chapter 13 Bankruptcy Discharge
At the conclusion of the three to five-year repayment period, the court will examine the case and determine whether to issue a discharge. As long as the debtor has adhered to the terms of the repayment plan, the court will likely issue a discharge and release the petitioner from the remaining debts (with a few exceptions). The petitioner may then move forward feeling lighter and more hopeful about their financial future.