If you are struggling with significant financial debt, you are not alone. Many individuals and families have fallen behind on mortgage payments, car payments, and credit card payments, particularly in the wake of the COVID-19 pandemic. The economic challenges exacerbated by the pandemic have prompted many people to explore their debt-relief options, including bankruptcy. Those unfamiliar with bankruptcy may picture officials coming to repossess their vehicle or home; however, filing for Chapter 13 bankruptcy relief actually allows you to retain your possessions while you gradually pay back a percent of the debt you owe. Below is a brief overview of the Chapter 13 bankruptcy process in New York.
The Goal of Chapter 13 Bankruptcy Relief
Chapter 13 bankruptcy, also known as the “wage earners plan,” allows debtors who have a steady source of income to repay a percent of their debts within a period of three to five years, while wiping away the remaining dischargeable unsecured debt. Chapter 13 works best for those who have fallen behind on secured debts, such as mortgage payments and car loans, or for people with property that cannot be protected in a Chapter 7 bankruptcy (i.e., a house with a significant amount of equity). Under a Chapter 13 case, an individual prepares a repayment plan lasting three to five years. This option helps people steadily catch up on their debts while maintaining control over their possessions.
Advantages of Chapter 13 Bankruptcy
While Chapter 7 bankruptcy cases tend to resolve much more quickly than Chapter 13 cases, Chapter 13 bankruptcy filings offer several advantages. To qualify, you’ll need to demonstrate that you have a source of regular income, such as wages, public benefits, social security, unemployment compensation, or other forms of income. Once you’ve put together the repayment plan, you can save your home from foreclosure and catch up on back mortgage and/or real property tax payments. Filing for Chapter 13 bankruptcy will also stop creditors from hounding you. Essentially, your property will remain in your possession while you steadily catch up on repaying a percent of your debts.
Is Chapter 13 Bankruptcy Right For You?
Facing a large amount of debt can be overwhelming and stressful. However, bankruptcy is far from a shameful option—it can help you regain your footing and obtain the fresh financial start you need to move forward. Consider reaching out to an experienced and compassionate New York bankruptcy attorney to discuss your situation and determine the most appropriate option to help you secure the relief you need. Together, you can move through the process with greater confidence and feel hopeful about the future once more.