ADVANTAGES OF FILING FOR CHAPTER 13 IN NYC
There are several advantages to filing a Chapter 13 vs. a Chapter 7 Bankruptcy in NYC. Each case is case by case and many people are better suited to file a chapter 7 but here are some advantages of filing a Chapter 13:
1. KEEP ALL OF YOUR ASSETS: In a chapter 7 if you have assets that cannot be fully exempted they can be forfeited to a trustee and used to pay off your debts. In a chapter 13 you will almost never loose your assets. As of August 31, 2016 I have never had a client in a chapter 13 loose an asset.
2. GET CAUGHT UP WITH YOUR MORTGAGE, RENT OR CAR PAYMENT: If you are behind on any of these payments you can have the opportunity to get caught up over 36 or 60 months in a Chapter 13. In a chapter 7 if you are behind on these payments you may loose your car or home. In some circumstances you can also get out of your second mortgage all together.
3. YOU CAN ALWAYS GET OUT OF CHAPTER 13: If you file a Chapter 7 Bankruptcy you do not have the automatic right to dismiss the case. As a matter of fact if a Chapter 7 trustee feels that your assets can be sold for a profit they will fight you very aggressively to make sure you remain in the case and your stuff is sold. In a chapter 13 you have the absolute right to have your case dismissed as long as you filed it in good faith.
4. PROTECT YOUR LOVED ONES: In a chapter 7 Bankruptcy a trustee may sue your friends or family members if they feel that you have fraudulently transferred property or money to someone prior to 7 years of filing your case. This is the worst case for many people. In a chapter 13 a trustee could ask for more money through your plan payments because of such a transfer but will not try and sue anyone. As a matter of fact, even if a trustee tried to do something like this you could always have a chapter 13 dismissed as long as it was filed in good faith.
5. PAY OFF YOUR TAXES AND DOMESTIC SUPPORT: In Chapter 13 you will have 36 to 60 months to pay off your priority and secured tax debt and any domestic support obligations. The remainder of your pre-filing tax debt will be dissolved when your case is finished.
6. NO STUDENT LOAN PAYMENTS ARE REQUIRED IN A CHAPTER 13: While in a Chapter 13 you are not required to make student loan payments.
These are just a few of the reasons why filing a chapter 13 can be a better option than filing a Chapter 7. The public policy reason is that since you are tying to pay something back to your creditors you should be treated more kindly.
Please note, there are differences in each jurisdiction that you can file in. I only practice Bankruptcy law in New York. You should contact a local attorney to find out more about Bankruptcy. If you are in New York City and interested in filing for Bankruptcy call my office at 212-244-2882 for a free consultation.