If you are reading this, you most likely believe you are experiencing substantial financial difficulties. Filing for Chapter 13 bankruptcy can provide you with the tools you need to avoid the worst consequences of overwhelming debt, including foreclosure. Upon completing a Chapter 13 repayment plan, you will typically be permitted to eliminate any remaining unsecured debt.
Our Long Island Chapter 13 bankruptcy lawyer has over 35 years of legal experience and can provide you with the knowledgeable guidance you need to secure a fresh financial start. We can help you develop a repayment plan that effectively targets mortgage arrears and maximizes debt relief. Our team understands what is at stake, and we are prepared to serve as your guide and advocate throughout each step of the process.
Only you can take the first step. Schedule a free initial consultation with Richard S. Feinsilver by calling (516) 268-0122 or contacting us online.
How Chapter 13 Bankruptcy Works
When you file for Chapter 13 bankruptcy, you will immediately benefit from the automatic stay. This court order halts all pending and ongoing collection actions, including repossession, foreclosure, and wage garnishments. In many cases, the automatic stay will remain in effect throughout the duration of your Chapter 13 bankruptcy. This can provide you with multiple years of protection.
After you have filed, you will need to promptly submit a Chapter 13 repayment plan that meets all requirements of the U.S. Bankruptcy Code. This repayment plan will allow you to repay mortgage arrears and some – or all – of other types of debt. The plan will last between three and five years and will reorganize your debts into a single monthly payment. The size of this payment will be determined by your current disposable income. In other words, you will be expected to pay what you can afford.
Once your proposed reorganization has been approved by a bankruptcy judge, your creditors must accept what the plan pays them. Thanks to the automatic stay, they will not be able to initiate or continue any collection efforts against you so long as you continue to pay your monthly installments.
Completing a Chapter 13 repayment plan entitles most filers to a discharge of any remaining unsecured debts. This means any remaining credit card debt, medical debt, personal loans, or unpaid utility bills will be eliminated and forgiven.
While you cannot necessarily discharge certain other types of debt, Chapter 13 bankruptcy can give you the time and flexibility you need to redirect funds and catch up on obligations. Our Long Island Chapter 13 bankruptcy attorney is committed to delivering the relief you need and can help strategize on how best to approach each facet of your financial situation.
Who Should File for Chapter 13 Bankruptcy in New York?
Chapter 13 bankruptcy is primarily utilized by residential homeowners – including owners of condos and co-ops – who are currently in danger of entering foreclosure proceedings. The Chapter 13 bankruptcy process allows homeowners to stop a pending foreclosure and repay mortgage arrears (and other types of debt) over a period of several years. During this time, they will be protected and supervised by the United States Bankruptcy Court.
While foreclosure remains the primary reason to file a Chapter 13 petition, individuals who may not be homeowners (or homeowners who are current on their mortgages) may also have reasons to pursue this type of bankruptcy. Individuals with incomes over the median for their household size in New York may not be eligible to file for Chapter 7 bankruptcy and can instead use Chapter 13 bankruptcy to effectively deal with debts. Any individual or married couple can qualify for Chapter 13 relief if they owe less than $1,184,000 in secured debt and less than $389,000 in unsecured debt.
Chapter 13 bankruptcy is designed for working people with steady incomes who want to pay their debts but are inundated with bills, judgments, lawsuits, and other financial issues. Filing a Chapter 13 petition and dutifully completing a repayment plan can assist you with regaining control of your financial situation.
Leveraging Chapter 13 Bankruptcy to Secure a Cramdown on a Second Mortgage
Chapter 13 bankruptcy also offers an important but often overlooked tool to consumers with a second or third mortgage. Under certain circumstances, Chapter 13 bankruptcy can facilitate the removal of junior liens from your primary residence.
If the current fair market value of your home (as determined by a licensed real estate appraiser) is below the present outstanding balance on your first mortgage (including any arrears), the second mortgage can be “stripped.” The debt associated with the second (or third) mortgage will be reclassified as unsecured, making it eligible for discharge. This process is referred to as a “cramdown” or “lien stripping.”
The stripping/cramdown provisions of the U.S. Bankruptcy Code have been available to New York homeowners since 1994. This relief may be available to you even if you have worked with your lender to modify your first mortgage or are in a trial modification on your first mortgage.
No Better Time to Act than Now
If you are in danger of losing your home or are unsure of how you will manage mounting bills, it may be time to consider seeking bankruptcy relief. We understand that the prospect of filing can be intimidating, but our Long Island Chapter 13 bankruptcy lawyer can help you understand what to expect and what types of debt you can expect to eliminate. Our team will help you avoid common errors and make every effort to protect you and your home.
Put Richard S. Feinsilver’s decades of experience to work for you by calling (516) 268-0122 or contacting us online. We offer our legal services in English and Spanish.
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