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Exploring the advantages filing for a Chapter 13 bankruptcy

Long Island residents who are struggling to make payments on their credit card debts or mortgage may be interested in how a Chapter 13 bankruptcy can help. This bankruptcy type has many advantages and allows manageable payments to be made over a period.

Chapter 13 bankruptcy is a type of bankruptcy that involves a repayment plan approved by a court that will satisfy a person’s debts within three to five years. The payments are calculated based on a person’s income. A person’s debts, both secured and unsecured, must be under a certain amount to qualify for Chapter 13. Currently, the ceiling is $1,149,525 for secured debt and $383,175 for unsecured, but these amounts change periodically.

The major advantage of a Chapter 13 bankruptcy is that, unlike a Chapter 7 bankruptcy, the debtor may be able to avoid foreclosure on their home. The Chapter 13 filing places a hold on the foreclosure procedure and allows the homeowner to pay off delinquent payments as long as they continue making their regular payments during the plan period. Co-signers on debts are protected under law, as well, so their credit may not be affected by the bankruptcy. Those under a Chapter 13 plan make one consolidated payment every month, which is then distributed to the creditors. The person does not have to have any contact with those creditors, either, which helps to reduce the stress that these financial challenges can bring.

Getting a fresh financial start can be possible through the use of a Chapter 13 bankruptcy. An attorney may be able to help a person determine if this type of a repayment plan is appropriate. The attorney may then be able to begin the bankruptcy process on their behalf.

Source:, “Bankruptcy Basics – Chapter 13“, Federal Bankruptcy Court, August 13, 2014

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