Chapter 13 Bankruptcy Overview

A Chapter 13, or reorganization bankruptcy, gives you the opportunity to pay off debts according to a court-approved payment plan over a period of three to five years. During the repayment period, interest and late fees do not continue to accrue.

The major benefit of a Chapter 13 bankruptcy is that you can keep all of your non-exempt property (typically a home or car that is mostly or completely paid off). This is compared to a Chapter 7 bankruptcy, where all non-exempt assets are sold to repay creditors.  (See, List of Property Exempt in a New York State Bankruptcy)  A Chapter 13 plan will pay back a percentage, or all, of the unsecured debt (such as credit cards) over time. Upon completion of the plan, the debtor will receive a discharge of any remaining debts and will be able to keep his or her property.

A common use of Chapter 13 is when you are behind on mortgage payments. Chapter 13 bankruptcy stops a house foreclosure proceeding and gives you the right to pay back the past due amount over a period of up to 60 months.

Is Chapter 13 Right for You?

The Chapter 13 bankruptcy  is for people who:
  • Have a steady income; and
  • Have significant equity in their home or other assets that they want to keep; and/or
  • Are facing foreclosure and want to save their house; and/or
  • Filed for Chapter 7 bankruptcy within the past eight years; and/or
  • Earn too much income under the "Means Test" to file for Chapter 7 bankruptcy
Contact Attorney Sherwood schedule a free consultation to discuss your options and determine if Chapter 13 best meets your financial goals.