This chapter of bankruptcy is where debtors repay a portion of their debt over a 3 to 5 year plan. The amount of their payment depends upon their income or on whether they have any unexempt assets they wish to keep.
If you have money left over after your reasonable and necessary expenses, (in excess of approximately $167 or more per month), then you may have to commit that amount to a monthly repayment plan. At the end of your plan the ENTIRE amount of your debt is discharged.
Like a Chapter 7 – in most cases you are keeping your home, your car and your retirement accounts.
This is also a great tool if you have fallen behind in your mortgage, but aren’t able to make a deal with your lender. You can take those mortgage arrears and simply pay them monthly in your repayment plan.
Another reason you might file a Chapter 13 bankruptcy is if you have an asset you want to keep, but it’s worth more than the allowed exemptions. For example, you are allowed a certain amount of equity in a car or your home. If your car or home is worth more than the allowed exemption, you can simply pay the un-exempt portion to the court in your 3 or 5 year bankruptcy plan. That amount is distributed to your creditors and at the end of your plan ALL the debt is discharged and you keep your assets.
Information for Chapter Thirteen Bankruptcy
2011 was a banner year for bankruptcy in New York State. Governor Patterson increased many of the older exemptions, opening up a world of possibilities for potential debtors.
An individual debtor can have up to $150,000 (in most NY counties) equity in their home ($300,000 for a married couple). Car exemptions are now $4,000. Your 401K and IRA retirement accounts are still exempt up to one million dollars.
So many people are struggling because they fear bankruptcy leaves them with nothing. The reality is it will put them in a better place than they were before they filed.
In fact, many debtors will actually see their FICO score go UP in just a little over a year from filing their bankruptcy. And often, after two years, debtors will be able to qualify for mortgages again.
While each case is different, the above is based on the typical bankruptcy filing. Far too often, people fear what they’ve heard about bankruptcy and never acquire the first hand knowledge from experts in the law. Even if you are still unsure, we provide a free consultation to evaluate your case and give you your options.
Again – the only thing you have to lose . . .is your debt.
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