Chapter 13 Bankruptcy in New York: What It Is and How It Can Save Your Home (2025 Guide)

If you’re falling behind on your mortgage, facing foreclosure, or overwhelmed by debt in New York, Chapter 13 bankruptcy could be the lifeline you need. Unlike Chapter 7, which eliminates debt by liquidating assets, Chapter 13 offers a way to restructure your finances and keep your property. This 2025 guide will explain everything New Yorkers need to know about Chapter 13 bankruptcy, including how it works, who qualifies, and how it can stop foreclosure.

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is also known as a “wage earner’s plan.” It allows individuals with regular income to develop a plan to repay all or part of their debts over three to five years. Under this chapter, debtors propose a repayment plan that must be approved by the bankruptcy court.

Instead of losing your home or car, you make manageable monthly payments to a Chapter 13 trustee, who then distributes the funds to your creditors.

Who Qualifies for Chapter 13 in New York?

To file Chapter 13 in New York, you must:

  • Have regular income
  • Owe less than $526,700 in unsecured debt (includes priority debts like taxes and domestic support)
  • Owe no more than $1,580,125 in secured debt
  • The secured debt must be noncontingent (not dependent on future events)
  • The unsecured debt must be liquidated (a certain and specific amount owed)
  • Be up to date on income tax filings

It’s ideal for homeowners, people behind on car payments, or individuals who don’t qualify for Chapter 7 due to higher income.

How Chapter 13 Stops Foreclosure

One of the most powerful features of Chapter 13 is the automatic stay. This legal protection goes into effect as soon as your case is filed and immediately stops foreclosure proceedings, wage garnishments, and creditor calls.

You can use Chapter 13 to:

  • Catch up on mortgage arrears over time
  • Stop a scheduled foreclosure sale
  • Reinstate your original mortgage after curing the default

What Can Be Included in a Chapter 13 Plan?

Chapter 13 plans are flexible. You can:

  • Repay mortgage and car arrears
  • Pay off tax debts and child support
  • Wipe out credit card and medical bills
  • Possibly strip off second mortgages if your home is worth less than the first mortgage

How Much Does Chapter 13 Cost?

  • Filing fee: $313 (as of 2025)
  • Attorney fees: Vary, but many attorneys offer affordable payment plans
  • Trustee fee: A small percentage of your monthly payment (usually 5-10%)

Monthly payments depend on your income, expenses, and the types of debts you have.

Timeline: What to Expect

  1. File petition with your repayment plan
  2. Automatic stay goes into effect
  3. Attend a 341 meeting of creditors
  4. Plan is confirmed by the court (usually within 2-4 months)
  5. Make monthly payments for 3-5 years
  6. Receive a discharge of remaining eligible debts

Real Example: A Bronx Family Saves Their Home

In early 2024, a Bronx couple fell behind on their mortgage due to medical bills. Facing foreclosure, they filed Chapter 13 and proposed a 60-month plan that allowed them to repay their $25,000 in arrears. The foreclosure was stopped, and they’ve now made 18 successful payments and are on track to keep their home.

Common Misconceptions About Chapter 13

  • “It ruins your credit forever.” (False. It’s on your credit report for 7 years, but rebuilding begins right away.)
  • “You can’t include taxes.” (False. Many taxes can be included.)
  • “You have to pay everyone back in full.” (False. Some unsecured debts can be discharged.)

When Is Chapter 13 Better Than Chapter 7?

Chapter 13 may be better if:

  • You want to save your home or car
  • You’re not eligible for Chapter 7
  • You have debts that are non-dischargeable (like child support)
  • You want to protect co-signers on certain debts

Get Help from a New York Chapter 13 Bankruptcy Attorney

If you’re considering Chapter 13 bankruptcy, the Law Office of William Waldner can help you protect your assets, stop foreclosure, and get a fresh start. We serve clients throughout New York City, including the Bronx, Manhattan, Brooklyn, and Queens.

Call us today or schedule a free consultation to learn more about whether Chapter 13 is right for you.

FAQs

Can Chapter 13 stop a foreclosure in NYC? Yes. The automatic stay will stop any foreclosure proceeding once your case is filed.

Can I include IRS or NYS taxes in Chapter 13? Yes, most back taxes can be included in your repayment plan.

What happens if I miss a payment? Your case may be dismissed, but courts often allow modifications or catch-up payments.

Will I lose my home or car in Chapter 13? Not if you stay current on payments. In fact, Chapter 13 is often used to save these assets.

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