Are Assets Liquidated in a Chapter 13 Bankruptcy in New York City?
Chapter 13 bankruptcy does not liquidate a debtor’s assets in order to satisfy creditors like a Chapter 7 bankruptcy. Instead of liquidating your property, a Chapter 13 allows you to repay creditors for the overdue amounts through a “wage earners” repayment plan. In a Chapter 13 your debts are re-organized and you will make monthly payments to a Chapter 13 bankruptcy trustee in order to catch up on your secured debts. This will allow you to save your home, car and many other assets while still eliminating your unsecured debts like credit cards, personal loans or medical bills as you would expect in a Chapter 7. Chapter 13 is designed for people facing a short or long term financial hardship that are having trouble paying their bills but want to keep their property by eventually catching up on past due payments.
A normal Chapter 13 repayment plan in New York City will take 3-5 years to complete. In order to qualify for a Chapter 13 you must be earning at least some income to satisfy your monthly payments. After all, it is called a “wage earners plan” but don’t let that scare you away from looking into Chapter 13. Temporary job loss or a change in career is a very common reason to have fallen behind on the bills. If you had your dream job, you probably wouldn’t be in financial trouble. The unsecured debts you have in your bankruptcy estate like credit cards, medical bills, and personal loans are given a lower priority, and will be eliminated in their entirety or at only pennies on the dollar. After you have completed your 3-5 year plan any remaining unsecured debt you have will be wiped away forever, like in a Chapter 7, but your assets will not be sold off. To keep your property out of the hands of your creditors you will need to make every monthly payment to the trustee as scheduled. Most of our clients that choose Chapter 13 are successful in getting their plan confirmed with our help, but it may require tightening the belt for a short time while you catch up on your debts. But through Chapter 13 you will actually be able to catch up and get ahead instead of barely making it or continually robbing Peter to pay Paul.
In New York City there a number of other reasons a consumer might choose Chapter 13 bankruptcy over Chapter 7 especially if they are living in one of New York City’s many rent stabilized apartments(Update: see: “http://midtownbankruptcy.com/ny-court-of-appeals-rules-that-rent-stabilized-leases-are-now-officially-exempt-in-bankruptcy/” target=”_blank”>Rent Stabilization and NYC.) If you think you need bankruptcy relief consult with an attorney familiar with both Chapter 7 and Chapter 13 cases and experienced in converting between the two. There is a lot to know, and your choice of attorney can have a big impact on your 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 mainly practice bankruptcy law and maintain a 99% Chapter 7 bankruptcy discharge record in New York City as of 9/11/2015.
**** 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. Attorney Advertising. We are a Debt Relief Agency, we help people file for Bankrutpcy