Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is also refer to as a reorganization bankruptcy or a “wage earner plan”.

A Chapter 13 bankruptcy involves the reorganization of a debtor’s financial affairs. The goal is to create a payment plan for the benefit of the creditors, while protecting the debtor from foreclosure, garnishment, levy, or similar consequences.  The plan period will vary from 3 to 5 years, depending upon whether your income is generally above or below the median income.

In order to qualify for Chapter 13 bankruptcy, the debtor must have an income that exceeds the debtor’s reasonable living expenses, as it is necessary that the debtor have sufficient means to provide repayment to creditors of past debts. In some cases repayment may be for the full amount of the debt, while in others the debtor may pay off only a small percentage of certain debts – perhaps as little as ten percent. The Chapter 13 bankruptcy tends to be favored by debtors who have fallen behind on secured loan payments, such as mortgages and car loans, as it enables the debtor to keep possession of the property while catching up on payments through a court-approved repayment plan. It may also be preferred by a debtor who has valuable non-exempt property that would be liquidated in the course of a Chapter 7.

The benefits of working with a NYC bankruptcy attorney and filing for Chapter 13 protection are that you can repay a portion of your debts under better terms. Basically it is the same as restructuring your current debts in order to pay them with future disposable income. For this reason, it is an ideal form of bankruptcy for debtors who receive regular income, and it allows them to ask for reductions or adjustments that are more favorable. With Chapter 13 Bankruptcy, the courts give debtors a maximum time span of five years, during which all creditors must be paid back. Because you are allowed to keep all of your property, the courts create a new plan that allows you to pay your obligations without incurring interest. During the proceedings, a written plan is drafted that details the repayments and their duration. Usually, repayment begins within 30 to 45 days after the initial filings, and monthly payments are made to the court-appointed trustee. The trustee then disburses the money according to the plan.

The Law Office of Julio E. Portilla, P.C., is dedicated to your case, and you can rest assured that you will receive personal and aggressive representation. We also strive to maintain open lines of communication at all times. If you would like more information, please feel free to contact us today.