Keeping your home or car while you catch up
Keep your property and catch up over time
Chapter 13 lets individuals with regular income repay debts through a court-approved plan that lasts three to five years. It is often the right choice for homeowners who have fallen behind on a mortgage, people with income too high for Chapter 7, and people with property they want to protect.
Our attorneys practice in the U.S. Bankruptcy Courts for the Eastern, Southern and Northern Districts of New York.
What Chapter 13 can do
- Stop a foreclosure and spread mortgage arrears over the life of the plan
- Stop a car repossession and, in some cases, reduce what must be paid on the loan
- Pay priority debts such as recent taxes over time, without penalties piling up
- Protect co-signers on consumer debts while the plan is in place
- Discharge the remaining unsecured debt that the plan does not pay when the plan is completed
How the plan works
You propose a plan based on your income, expenses and the value of your property. Unsecured creditors must receive at least what they would get in a Chapter 7 case, and you commit your disposable income to the plan. The trustee collects one monthly payment and distributes it to creditors. The bankruptcy judge must confirm the plan.
Who qualifies
Chapter 13 is available to individuals, including sole proprietors, with regular income and debts under the limits set by the Bankruptcy Code. Corporations and partnerships cannot file under Chapter 13.
See also Chapter 7 and BankruptcyShark.com.
Frequently asked questions
Can Chapter 13 stop a foreclosure sale?
Generally yes. Filing triggers the automatic stay, and the plan can cure the missed mortgage payments over three to five years while you keep making current payments.
What happens if I miss a plan payment?
Talk to your lawyer right away. Plans can sometimes be modified when income changes, but repeated missed payments can lead to dismissal of the case.
Is Chapter 13 better than Chapter 7?
It depends on your income, your property and your goals. Chapter 7 is faster; Chapter 13 protects property and can stop foreclosure. A consultation can help you choose.