Chapter 13 Bankruptcy in New York State

Readjustment of debt is available to debtors who choose to file Chapter 13 New York bankruptcy cases. Options include: extended payment terms, lower interest, principal discounts, the elimination of late fees, and even the discharge of remaining balances, all with continuing court protection. Many US Code provisions apply to all chapters, while 11 U.S.C. Sec. 1301 applies only to Chapter 13.

Chapter 13 is designed to allow financially distressed individuals who file New York bankruptcy to invoke a cloak of protection provided by the courts. Under court supervisions, assets are protected, and a proposed plan must be filed that provides for payment of all or part of debts owed. Following confirmation, a trustee collects monthly payments, deducts a fee for services provided, disburses payments to creditors, and provides a periodic accounting to the court. All laws applicable to New York bankruptcy are currently under review by the U.S. Congress, especially payment amounts required in Chapter 13. Reform bills specifically target New York bankruptcy by placing a mandatory limit on all state homestead exemptions, and limit allowable living expenses to a standard adopted from the IRS which applies to criminals charged with tax evasion.

New York Bankruptcy Plans

Chapter 13 is designed for individuals with regular income. The term "wage earner" is derived from this requirement and is still in use today for New York bankruptcy under Ch. 13. These plans are ideally suited for employees who desire court protection from creditors and are also permissible for sole proprietors who satisfy the "regular income" requirements of the Code. Plans may provide either full or partial payment of debts, with discharge of remaining balances, if any, upon completing all payments. Plan terms are available for New York bankruptcy cases ranging from 3 to 5 years. A plan lasting more than three years must be approved by the court "for cause." All Chapter 13 plans are limited to a maximum of 5 years. 11 U.S.C. 1322(d).

Individuals, including self-employed owners of sole proprietorships, are authorized to file Chapter 13 if owing less than $269,250 in unsecured debts, and less than $807,750 in secured debts. 11 U.S.C. 109(e).

Qualification for New York bankruptcy relief is not based on US citizenship. Residency within the state, or property ownership within the state may satisfy jurisdictional requirements for consumers seeking relief under Chapter 7 or Chapter 13 of the US Code.

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