Chapter 7 vs. Chapter 13 BankruptcySunday, June 5th, 2016, 9:11 pm
Bankruptcy in Brooklyn and elsewhere involves a formal process to reconcile or legally discharge the responsibility of paying financial obligations to creditors when a person is unable to pay their bills and/or make the minimum payments on their credit cards and loans that it is unlikely they will be able to recover. Bankruptcy allows individuals and families financial relief so that they can get back to a normal standard of living without losing everything they own.
Unlike Chapter 7 bankruptcy, if you file Chapter 13, you will still be required to pay all of your debts. Chapter 13 bankruptcy in New York serves the purpose to help you restructure those debts into a more manageable payment plan usually lasting between 3-5 years.
Advantages of Chapter 13 Bankruptcy
The biggest advantage of filing for Chapter 13 over filing for Chapter 7 bankruptcy is that you are able to keep all property, regardless of if it is exempt or not. If you are able to keep up with the payment plan you are given, the left over debt will be removed at the end of the repayment term.
Chapter 13 can also protect any cosigners you had on your loans. If your debts are related to taxes, child support, or any other debt that makes you ineligible to file Chapter 7, you can create a restructured payment plan under Chapter 13. Finally, Chapter 13 can be filed repeatedly and at any time.
Disadvantages of Chapter 13 Bankruptcy
Because Chapter 13 requires you to continue making payments on your debts, it will not be immediately removed as it usually is in Chapter 7. Instead, you will be required to continue making payments on your debt for three to five years, meaning you will also be a part of the bankruptcy court process during that time. It can also be more expensive to file Chapter 13 because the process is more complex and has more necessary steps than Chapter 7.
If you need help determining what style of bankruptcy is right for you and your situation, contact a Brooklyn bankruptcy attorney at Michael F. Kanzer & Associates, P.C. Our office of experienced bankruptcy law attorneys have helped hundreds of individuals discharge their debts by providing expert protection against Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy for more than a decade.