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How does a Chapter 13 bankruptcy work and is it right for me?

If you are one of the many New York residents who is financially struggling, you have likely started looking into what debt relief options are available to you. You have likely seen and heard advertisements for help that seem far too good to be true — and they probably are. Even though many people wish to avoid it, sometimes bankruptcy really is the best option.

There are two types of bankruptcy meant to help with personal finances: Chapter 7 and Chapter 13. A Chapter 13 bankruptcy is for those individuals who still have income, just not enough to get them out of debt right away.

The basics

If you have debts and struggle to meet your monthly obligation to your creditors, a Chapter 13 bankruptcy can make it more affordable for you to pay back the money you owe. With this type of bankruptcy, if approved in court, a repayment schedule is created that fits within your current budget. You will make the ordered payments for three to five years, then any amount owed after that — for certain debts — may qualify for discharge.

The repayment schedule is one great benefit of pursing this type of bankruptcy. Another is that it can stop creditors from harassing you. They are not allowed to contact you or attempt payment collection while you have an active bankruptcy case open.

Am I eligible?

It all depends on the types of debt you have and what your financial situation currently looks like. To be eligible for a Chapter 13 bankruptcy, you do have to have steady income. Your unsecured debts cannot be more than $394,725 and your secured debts must be less than $1,184,200.

Filing the petition

Filing a Chapter 13 bankruptcy petition is pretty straightforward. An official bankruptcy request needs to be submitted in court. Along with that, you must include information about your creditors, a list of your property, a list of your monthly expenses and a proposed repayment plan.


There are never any guarantees that bankruptcy petitions will receive court approval. Some do not. If there are errors in your paperwork, if creditors contest your filing or repayment plan, if you fail to show up to your court hearing or any number of other things, the court may deny your request. If this happens, you will have to wait a set period of time before you can file again.

You can help yourself and help your Chapter 13 bankruptcy case by seeking assistance with the filing from the start. An experienced attorney can make sure you meet the eligibility requirements, ensure your submission is error free and negotiate a repayment schedule all to better your chances of receiving court approval and the debt relief you desire.

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