Chapter 13 Bankruptcy

This society runs on credit.  It is pushed on people, whether they seek it or not.  But then if financial difficulties rise up and you can’t pay your bills on time, you are made to think you are a deadbeat and less worthy than others who haven’t had your difficulties.  Our observation is that the inability to maintain an A+ credit rating does not mean you are less worthy as a human being, nor any less a good parent0 or spouse.                

Fortunately, financial difficulties do not have to mean endless family stress and potential health problems.  All societies provide for a financial fresh start.  In this country, the way to a new financial life is via bankruptcy.  For our firm, bankruptcy is a worthy part of our legal system.  It helps keep families together, reduces suicide and keeps the homeless situation from getting worse.

Bankruptcy Choices.  When most people think of bankruptcy, they think first of the type of bankruptcy where your debts are discharges and all your property is lost to your creditors. However, there are two types of bankruptcies: the more familiar liquidation bankruptcy, where your debts are canceled completely (“Chapter 7" bankruptcy) and reorganization bankruptcy, where you partially or fully repay your debts.  The reorganization bankruptcy for individuals is called Chapter 13 bankruptcy.

Chapter 13 bankruptcy lets you rearrange your financial affairs, repay a portion of your debts and put yourself back on your financial feet.  You repay your debts through a “Chapter 13 plan.”  Under a typical plan, you make monthly payments to a bankruptcy trustee appointed by the Bankruptcy Court, who oversees your case for three to five years.  The bankruptcy trustee distributes the money to your creditors.  

If you have tried to work with a debt consolidation organization, the process is similar to  what you have been trying to accomplish without filing for bankruptcy, but there are at least two major differences.  First, the "Plan" is designed to pay to your creditors what you can afford to pay based on your income and household expenses.  Second, if the “Plan” you propose is approved by the Bankruptcy Court, your creditors have to go along with it, whether they like it or not.  You can also deal with some or all of your back taxes, which was difficult to handle within a debt consolidation plan.

The downside is that Chapter 13 Bankruptcy is not for everyone.  If your debts are too large or your income too low or irregular, you may not be eligible.  You may be able to handle your debt problems in another way - such as a Chapter 7 Bankruptcy, or negotiating with your creditors on your own, or with the help of an attorney.  

In the near future, we will add additional articles on the different aspects of Bankruptcy.  If you need to make a decision on your financial situation, please call our office for an appointment.

626 Reckson Plaza
Uniondale, NY  11556

Telephone
(516) 522-2575

Copyright © 2007 STEPHEN C. SILVERBERG, PLLC  All rights reserved.
Last modified: December 26, 2007

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