At first glance Chapter 7 will seem like the best way for most consumers in New York City to file bankruptcy because it takes less time and doesn’t require you to repay your creditors. The truth is however that Chapter 13 can offer far more protection and financial relief for many people in need of bankruptcy protection than a Chapter 7, and in New York City there are other unique reasons for choosing a Chapter 13. It’s important to work with a bankruptcy attorney in New York City that will explore Chapter 13 alongside your Chapter 7 options. Many firms will focus on or even steer people towards a straight Chapter 7 that could have been better served by a Chapter 13. There are many reasons a consumer might choose to file a Chapter 13 that we have written about in the past, but here is a quick rundown of some of the Chapter 13 advantages to consider when consulting with your attorney.
1. Both you and your co-debtor are protected by the “Automatic Stay” on the debts you share even if only one of you files Chapter 13. Creditors cannot simply start calling your husband or wife when you file Chapter 13. They are protected and if necessary can file jointly with you or even a separate Chapter 13 case to provide the most protection for your family’s assets.
2. You can pay for your bankruptcy attorney through your Chapter 13 plan. Filing Chapter 7 will require you to pay all of your legal fees up front, delaying your filing in many cases, but in a Chapter 13 your attorney can be paid through the monthly payments to the trustee so you can get the relief you need now.
3. Unlike a Chapter 7 bankruptcy, if your Chapter 13 plan isn’t accepted by the court you can dismiss the case. Once you start down the path of a Chapter 7 on the other hand there may be no turning back. Similarly, a Chapter 13 plan can be modified or even converted to a Chapter 7 midstream if your financial hardships worsen. And if you convert to a Chapter 7 you can then strategically file another Chapter 13 to prevent home foreclosure or to deal with other priority claims.
4. Chapter 13 will prevent foreclosure and allow you to keep your home by slowly catching up on the past due payments over the next 3-5 years. At the same time your unsecured debts like credit cards, medical bills and personal loans will be eliminated. You can also save your car from repossession and may even be able to keep it without reaffirming the debt if you file Chapter 13. You can also reclaim certain property that was repossessed from before your filing date.
5. Chapter 13 can help you address tax debts, child support or alimony arrears and even student loans. Chapter 13 allows you to repay many debts interest free that would not be dischargeable in a Chapter 7. Debts created in order to repay taxes can be eliminated in a Chapter 13, but may not be discharged in a Chapter 7.
6. If creditors continue to harass you after filing Chapter 13 they will be in violation of the Bankruptcy Code. Each violation may be worth money and many clients are simply unaware of the illegal collection practices they have been subjected to. Chapter 13 can allow you to turn the tables on your creditors.
7. In New York City filing Chapter 13 is the only way to ensure that you can save a rent stabilized apartment lease through bankruptcy. Many Chapter 7 trustees are viewing these leases as assets that could be sold off to satisfy your creditors. Filing a Chapter 13 from the start is the only way to ensure your valuable rent stabilized lease will be safe in bankruptcy.
At the end of the day it is important to understand that Chapter 13 trustees want to work with you to make your plan work. They are not your adversary as is often the case in a Chapter 7 bankruptcy. Instead of finding ways to take your property they will be more inclined to work with you to your benefit and less likely to try to dismiss your case. Without the advice of a bankruptcy attorney in New York City you can’t know for sure if you should be filing Chapter 13, but be sure to ask about your Chapter 13 options, and be sure to work with an attorney experienced with both Chapter 7 and Chapter 13 cases. 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 maintain a mere perfect Chapter 7 bankruptcy discharge record in New York City as of 10/7/15.
**** 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 and help people file for Bankrutpcy under the Bankrutpcy Code.