Can Chapter 13 Bankruptcy Give Me a Fresh Start Like Chapter 7 in New York City?
Yes, in fact Chapter 13 can actually provide the best and most complete fresh start, it just takes more time than a Chapter 7. In New York City, a Chapter 13 repayment plan is completed in 3-5 years whereas a normal Chapter 7 discharge is received in about 6 months from the date of filing. But good things come to those who wait, because while the Chapter 13 process is a bit more involved, it can help you eliminate more of your debts and protect more of your assets than a Chapter 7 filing.
Unlike a Chapter 7, Chapter 13 can help wipe out priority debts such as taxes, mortgage or rental arrears and even domestic support obligations like alimony and child support. Your debts will be entirely discharged like debts in a Chapter 7, and addressed in one reasonable monthly payment to the bankruptcy trustee. As in a Chapter 7 many of your non-priority general unsecured debts like medical bills and credit card bills will also usually be reduced to nothing. Completing a Chapter 13 plan can save your home, eliminate priority debts and give you much of the same benefits as a Chapter 7 if you can be successful in your repayment plan.
Another big advantage of filing Chapter 13 in New York City especially is avoiding the growing issue of rent stabilized leases ending up in bankruptcy estates as assets. Trustees and landlords alike are beginning to see the resale value in rent stabilized leases, and more and more of them are being bought up by landlords who would rather have a market rate tenant occupying the unit. If you file Chapter 7 your rent stabilized apartment lease could be on the chopping block, free for your trustee to sell as a way to repay your creditors. Filing for Chapter 13 will protect you from this possibility. If you have a rent stabilized lease and you file for Chapter 7 on the other hand you might get a successful discharge, but your fresh start could be on the streets.
People file for bankruptcy as a way to protect themselves and their assets. Sometimes it makes the most sense to give a little bit more upfront to see a whole lot more in return. Meeting the terms of a Chapter 13 plan can be challenging, but for many of our clients in New York City it works out to be the best solution in the end. If you are considering bankruptcy or concerned about passing the bankruptcy means test find a qualified attorney who can help you understand all of your bankruptcy options. If you live in New York City please contact the Law Offices of William Waldner online or at 212.244.2882 to arrange a free bankruptcy consultation today. We only practice bankruptcy law and maintain a 99% Chapter 7 discharge record in New York City as of 8/31/16.
This article is intended for educational purposes only. By reading no attorney-client privilege has been created.