Under chapter 13 bankruptcy, New Yorkers with regular income can develop a plan for repaying their debts. Depending on how much money you earn, the bankruptcy period may last three to five years. During the bankruptcy period, creditors cannot start or continue collection efforts.
A distinctive feature of chapter 13 bankruptcy is that it can save a home from foreclosure, according to the New York State Bar Association. If a homeowner files for chapter 13 before a creditor holds a foreclosure auction, the creditor must suspend foreclosure proceedings. Individuals must still make mortgage payments on time during their chapter 13 plan.
Creating a repayment plan under Chapter 13
People who file for bankruptcy under chapter 13 keep their property, but they will have to continue paying for it. Chapter 13 protects personal property that people need to maintain a home and job. When a filer wants to keep luxury items like boats or vacation homes however, they must pay for it through the chapter 13 repayment plan.
Chapter 13 for people with many unprotected assets
The courts may not allow someone with many unprotected assets like luxury items to file for chapter 13 bankruptcy. That is because the filer’s income must be sufficient to meet all required payments. This may be impossible for people who owe a lot of money for personal property that bankruptcy law does not protect.
The appeal of Chapter 13 for avoiding liquidation
The typical chapter 13 bankruptcy filer is able to keep personal property, even if they are still making payments on it. Chapter 13 is in some ways similar to a consolidation loan that makes regular plan payments to creditors.