Am I Eligible for Chapter 13 Bankruptcy in New York City?

For many people in New York City facing a financial crisis Chapter 13 can be best remedy, but not everyone will automatically qualify for Chapter 13 protection. Typically, in order to meet the terms of your Chapter 13 repayment plan you must have enough to disposable income to make your scheduled monthly payments or have a third party who will contribute sufficient income. You will also need to show the Bankruptcy Court that you also have enough income to pay for your regular expenses like your bills, mortgage, or car payments on top of your Chapter 13 plan payments.

A Chapter 13 bankruptcy repayment plan can be funded through a number of income sources. Wages or salary from an employer or from your own business are the most common ways to fund a plan, but incoming sales commissions, royalties, or wages from seasonal work are also acceptable. If you are out of work entirely at the time you need to file bankruptcy you can use other sources of income to pay for your plan provided it will be enough to do so. Pension payments and most all types of public benefit payments including Social Security, Disability, Workers’ Comp, Unemployment, Welfare, Child Support and Alimony payments can all be used to fund a Chapter 13 plan. If you are collecting rent on a property you own this can also be used to fund the plan, and if you receive proceeds from selling a property these can also be used towards funding a Chapter 13. A spouse that is not working can file Chapter 13 and use their working spouse’s wages to support the plan as well, and only one spouse needs to be earning an income for a married couple to file Chapter 13 jointly.

Beyond having a source of disposable income, in order to qualify for Chapter 13 in New York City your total secured debts must not exceed the current limit of $1,149,525. Secured debts include mortgages, car loans and many tax debts. On the other hand, your unsecured debts cannot be in excess of $383,175. Unsecured debts most commonly include credit card debts, personal loans, medical bills and most any other debts that aren’t secured by property. Furthermore, businesses may not file for Chapter 13, but individual business owners can declare bankruptcy on certain business debts that they are personally liable for if it makes more sense than re-organizing your business under Chapter 11. You will also need to prove to the bankruptcy court that you are current on filing your New York State and Federal tax returns in order to file Chapter 13 bankruptcy by showing the last 4 years of your tax returns.

Qualifying for bankruptcy, and Chapter 13 especially, is not black and white. If you think you are a good candidate for bankruptcy relief speak to an attorney. There is a lot to know about qualifying for bankruptcy and a lot a good bankruptcy attorney can do to help you get there. Your choice of attorney can have a big impact on your bankruptcy case. If you live in New York City contact the Law Offices of William Waldner online or at 212.244.2882 to arrange a free consultation today. We only practice bankruptcy law and 99% of our Chapter 7 cases filed as of 10/7/2015 have or will receive a discharge.

**** DISCLAIMER: This article is intended for educational purposes only. By reading no attorney-client relationship has been created. Prior results do not guarantee a similar result for future clients.