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Chapter 13 – Reorganize and Consolidate Your Debt

Chapter 13 is known as a “wage earner” bankruptcy because it is intended for individuals who have a steady source of income, but need help to bring their finances to a more manageable level. Chapter 13 allows you to consolidate your outstanding debts into one monthly payment to repay all or part of your debts over a 3-5 year time period. Your disposable income will be among the factors which determines the amount you will pay each month. 

If you adhere to the terms of your repayment agreement, all your remaining dischargeable debt will be released at the end of the plan. 

New York Chapter 13 Bankruptcy Eligibility Requirements

To be eligible to file for Chapter 13 bankruptcy, you must have no more than $394,725 in unsecured debt, such as credit card bills or personal loans. You also can have no more than $1,184,200 in secured debts, which includes mortgages and car loans.

Key Advantages of Chapter 13

Chapter 13 is a beneficial tool if you want to accomplish the following: 

  • catch up on missed car and/or mortgage payments
  • avoid foreclosure on your property and repossession of vehicles
  • keep valuable non-exempt property
  • stop interest from accruing on your tax debt  

Steps Specific to a Chapter 13 Filing

Submit a proposed repayment plan 

Confirmation Hearing – One month after the 341 Meeting of Creditors, you will need to attend a hearing before a bankruptcy judge who will either confirm or deny the repayment plan. If your plan is confirmed and you make good on it, the balance (if any) on the dischargeable debts you owe will be eliminated at the end of your term.