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Chapter 13

Chapter 13 Bankruptcy in New York City

Chapter 13 Bankruptcy

Chapter 13 is a form of bankruptcy where you pay money back to your creditors for up to a period of 5 years. It is used when you have too much money left over to file a Chapter 7 bankruptcy or if you are trying to save your house by paying back monies owed to avoid a foreclosure.

In a Chapter 13, you must pay your creditors back money based upon the greater of your monthly disposable income or the value of the things you own.

In a Chapter 13 you take your monthly disposable income to the court for 5 years or until your debt is paid off, which ever comes first. If 5 years comes and all of your debt is not paid, the remaining debt is discharged and you do not have to pay it.

However, the above does not apply to back taxes (that are not dischargeable) owed to the IRS or New York State. Back taxes must be paid in full in your Chapter 13 plan with no exceptions.

Chapter 13 is also used to save a house from foreclosure. If you are behind on your mortgage, you can file a Chapter 13 plan and you can pay back the money you are behind, called the arrears, over five years with no interest or penalties. What happens is you pay the regular mortgage payment each month to the bank and the arrears to the court. At the end of the five years, your mortgage is deemed current and you then just pay the normal monthly payment to the bank.

Although you are paying money back, Chapter 13 can be an invaluable tool to getting your life back on track. Please contact the Law Offices of Gregory A Flood to let us see how we can help.

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