New York Bankruptcy Law
FANNING & HUGHES: New York Bankruptcy Law Firm
If you are suffering under the burden of debt, an experienced New York bankruptcy lawyer from Fanning and Hughes can give you a fresh financial start. The New York bankruptcy lawyers at Fanning and Hughes can help you file for bankruptcy under Chapter 7 or Chapter 13.
Chapter 13 Bankruptcy – An Overview
Chapter 13 bankruptcy is sometimes called “the wage earner's plan” or reorganization bankruptcy. In a Chapter 13 bankruptcy, you use your income to pay some or all of what you owe over time, up to five years, depending on the size of your debts and income.
The usual Chapter 13 candidate has a valuable asset, such as a house, that cannot be kept (claimed as exempt) under Chapter 7, or they have too much income to qualify for Chapter 7. Under Chapter 13, creditors are paid through what is essentially a court-supervised repayment plan. In order to qualify under Chapter 13 you must have regular income. This income may consist of wages, commissions, rents, public benefits, social security, unemployment, alimony, child support, or pensions.
Credit Counseling
Before you can file a case you must complete a credit counseling course. The purpose of this counseling is to determine if an informal repayment plan would work for you instead of bankruptcy. It may be waived only in cases of disability or active military service. The counseling session can be done over the phone or on the internet. It takes an hour and costs about $50. Two reputable companies you may consider are Hummingbird (www.hummingbird.org - internet only) and the Institute for Financial Literacy (1-866-662-4932 or www.financiallit.org).
The Chapter 13 Repayment Plan
When you case is filed, it will contain a plan for repayment of your debts. This form is the most important paper in your Chapter 13 bankruptcy case. It proposes in detail how much you will repay each of your debts.
The Chapter 13 plan must pay certain debts in full: child support and alimony, wages you owe to employees, and certain tax obligations. These are called priority debts.
The Chapter 13 plan must include your regular payments on secured debts, such as a car loan or mortgage, and also provide for repayment of back amounts due on these debts.
Any remaining income left after making these required payments must go towards repaying your unsecured debts, such as credit card or medical bills. These debts do not have to be repaid in full, or at all, in many cases. If there is no remaining income, then they do not get paid and the debts are discharged if you complete the Chapter 13 payment plan.
Payments to the Court
You must start making payments under your Chapter 13 repayment plan within 30 days after the plan is filed with the bankruptcy court. Payments are made directly to the bankruptcy trustee. Once your repayment plan is confirmed, the trustee will distribute the money to your creditors.
Who is the Trustee?
Trustees are Attorneys appointed by the Office of the United States Trustee of The Department of Justice to oversee the Bankruptcy. A chapter 13 trustee is an officer of the Court appointed to oversee the bankruptcy estate, make sure the debtor's plan is in compliance with the Bankruptcy Code, and ultimately collect and distribute all payments to be made by the debtor. The chapter 13 trustee is compensated by collecting a commission on the debtor's payments.
If you can't make payments
If you are unable keep up with the payments or otherwise finish a Chapter 13 repayment plan the bankruptcy trustee may modify your plan. The trustee may:
- Grant a grace period, if the problem looks temporary
- Reduce the monthly payments, or
- Extend the time period of the repayment period.
If it's clear that you cannot complete the plan because of changed circumstances, the court may discharge your debts on the basis of hardship, such as a debilitating illness. Another option is to convert your case to a Chapter 7 bankruptcy. Finally, you could also ask the bankruptcy court to dismiss your Chapter 13 bankruptcy case. Your debts would not be discharged however.
How a Chapter 13 Case Ends
Once you complete your Chapter 13 repayment plan, most remaining debts will be wiped out.
Before you can receive a discharge, you must show the court that you are current on your child support and/or alimony obligations and complete the Personal Financial Management Instructional Course.
Personal Financial Management Instructional Course
In order for individuals in Chapters 7 and 13 to receive a discharge in bankruptcy, they must complete a personal financial management instruction course. 11 U.S.C. § 111(d). This course is separate and distinct from the Credit Counseling course that you must take before a case can be filed.
In a Chapter 13 case, this course must be completed and the certificate filed no later than the last payment date required under your plan. FRBP 1007(c). Your failure to obtain the financial management course and file the certificate before the deadline will result in your bankruptcy case being closed WITHOUT the entry of a discharge. FRBP 4004(c)(1)(H). A main purpose of filing for bankruptcy is to obtain a discharge.
Next >> The Means Test - Do I qualify for Chapter 7 Bankruptcy?
We are a federally designated debt relief agency helping people for relief under the bankruptcy code.
FANNING & HUGHES, PLLC
108-18 Queens Blvd -
4th Floor
Forest Hills, NY 11375
718.261.3290 p
718.228.2422 f
contact@FHLawOffice.com
