New York Chapter 13 bankruptcy code applies to debtors whose income is above the New York median income. It enables bankruptcy filers to develop a plan to repay part or all of their debt within three to five years. Chapter 13 bankruptcy can prevent foreclosure on a house, enable you to catch up on mortgage and car payments, stop interest accumulation on tax debt and protect valuable non-exempt property. A Chapter 13 bankruptcy may also allow you to pay back non-dischargeable debt such as tax debt and student loans if you include them in the Chapter 13 bankruptcy payment plan. Furthermore, if you have a co-debtor on any of your debt, a Chapter 13 bankruptcy will protect you co-debtor as long as you keep up with the monthly payments in your Chapter 13 bankruptcy payment plan. If you abide by your payment plan, any balances on dischargeable debt at the end of the term will be eliminated. In addition to several other factors, the amount to be paid is determined by the New York Means Test. The Chapter 13 bankruptcy code also stipulates that creditors must be compensated at the very least what they would have received if the creditor filed under Chapter 7 bankruptcy. In addition, the debtor must have disposable income as well as a “regular” source of income to contribute towards the payment plan.
Chapter 13 bankruptcy allows an individual to reorganize their finances. Over time, they also have an opportunity to make up missed payments. It is best suited for those debtors who want to keep valuable non-exempt assets.
The fundamental difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy is that a Chapter 7 bankruptcy is liquidation, where as a Chapter 13 bankruptcy is reorganization. A Chapter 7 bankruptcy is designed for lower income earners while a Chapter 13 bankruptcy caters for those filers who earn higher income.