For people in Long Island and throughout New York, there’s no way to be prepared for the curveballs that life often throws. Whether it’s unemployment, an unexpected medical issue or simply making mistakes with one’s finances, there are many ways in which financial challenges can arise. Chapter 13 bankruptcy is a useful tool to get back on better financial footing while simultaneously saving one’s home from being foreclosed upon.
Whereas a Chapter 7 filing includes liquidation, Chapter 13 is a repayment plan. It many cases, it allows people to stop foreclosure of their home. Over the passage of time, delinquent mortgage payments can be eliminated as long as all payments are made while the Chapter 13 bankruptcy is in effect. In addition, secured debts can be rescheduled and extended. The payments might be lowered as a result of this. It also has a protective aspect for third parties who might be liable for consumer debts to help co-signers. This is similar to a consolidation loan in which payments will be made to a trustee who will be responsible for distributing the payments to the creditors.
Understanding the eligibility for Chapter 13 is also important. The debtor’s unsecured debts must be lower than $383,175 and secured debts are required to be less than $1,149,525. These numbers can change depending on the current consumer price index. A person who has filed for bankruptcy and had it dismissed for failing to appear or for not complying with the terms in the previous 180 days cannot file for Chapter 13. It is also necessary to receive credit counseling within 180 days of filing.
While many people are uncomfortable with the thought of declaring bankruptcy, it is in truth a tactic that can help to save one’s home and deal with real financial challenges. Of course, discussing the matter with a legal professional experienced in all forms of bankruptcy is a wise decision before moving forward.
Source: USCourts.gov, “Chapter 13,” accessed on Apr. 2, 2015