Ten Benefits of Chapter 13 Bankruptcy in New York City

The primary difference between Chapter 13 and Chapter 7 bankruptcy is the wage earners payment plan.  Chapter 13 offers more debt relief and more property protection than Chapter 7 in exchange for a promise to pay back a portion of your debt through a 3-5 year repayment plan.  In a Chapter 13 you are working with the courts to pay a portion of your debt.  For many of our clients in New York City Chapter 13 will be the most beneficial way to file bankruptcy.

The first thing to know if you are considering a Chapter 13 bankruptcy in New York City is that most of your debt will not be repaid.  Your repayment plan will be based on your monthly income as well as the types of debts you have and amounts you owe.  Every client’s situation is a little different, but in general Chapter 13 will provide many benefits that Chapter 7 may not including:

  1. 1.    Saving Your Home- filing for Chapter 13 may allow you to catch up on payments and keep your home if you are already in default on your mortgage or behind on your rent.  Chapter 13 can also allow you to walk away free and clear from a home that is currently in foreclosure.
  2. 2.    Erasing Your Tax Debt- not all tax debt is dischargeable in bankruptcy but filing Chapter 13 will usually eliminate interest and penalties on most tax debts.
  3. 3.    Managing Domestic Support Arrears- certain domestic support obligations and marital property settlements can be eliminated under Chapter 13 that cannot be under Chapter 7.
  4. 4.    Discharging of Debt- Chapter 13 eliminates toxic credit cards, bank loans and medical debts to help provide a financial second chance.
  5. 5.    Stopping Wage Garnishments- Chapter 13 will stop creditors from garnishing your wages and may even allow you to get some of your garnished wages back.
  6. 6.    Paying Off Your Car- the Chapter 13 repayment plan may allow you to “strip-down” your auto loan principal payment making it easier to pay off and keep your car.
  7. 7.    Repaying Auto Finance Loans- the wage earners repayment plan will prevent the repo man from coming even if you are significantly behind on your auto loan payments provided you stick to the plan.
  8. 8.    Getting Your Drivers License Back- suspensions on driver’s licenses can actually be lifted when filing Chapter 13 bankruptcy protection in many cases.
  9. 9.    Postponing Student Loan payments for 3-5 years- if you have significant student loan debt Chapter 13 can allow you to delay your payments for up to 5 years.

10. Keeping More Property- if you have equity or assets that are not exempt from your creditors in Chapter 7, Chapter 13 may allow you to keep more of this property.

There are many other benefits to filing Chapter 13 Bankruptcy in New York as well, but Chapter 13 is not for everyone.  To be successful you must commit to the negotiated repayment plan, but if you can stick to it you are often likely to receive more protection and a better outcome than with a Chapter 7 filing.

If you are considering Bankruptcy protection in New York City and are looking for an attorney familiar with Chapter 13 as well as converting Chapter 7 to Chapter 13 cases please contact the Law Offices of William Waldner.  Reach us online or call 212.244.2882.  We provide affordable bankruptcy relief for all New Yorkers.

This article is intended for educational purposes only.  By reading this article no attorney-client privilege has been created.