Bankruptcy Attorney Explains How a Chapter 13 Bankruptcy Case Can Save a Family Home on Long Island, NY
Imagine you’re a family on Long Island, NY, struggling to keep up with mortgage payments. You’re facing foreclosure, and the idea of losing your family home feels overwhelming. But there’s hope: Chapter 13 bankruptcy. With the help of a knowledgeable bankruptcy attorney, you could protect your home and regain financial stability. In this article, we’ll explore how a Chapter 13 bankruptcy case can save your family home and why having an experienced attorney is critical in navigating the complex legal landscape.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is often referred to as the “wage earner’s plan.” Unlike Chapter 7, which liquidates assets to pay off debts, Chapter 13 allows individuals with a steady income to reorganize their debts and establish a repayment plan over three to five years. This form of bankruptcy is designed for people who want to keep their property, such as their home, while still addressing their debt issues.
Understanding Bankruptcy on Long Island, NY
The cost of living on Long Island is notoriously high, and when financial struggles hit, they can feel insurmountable. Many families turn to bankruptcy as a last resort to stay afloat. While bankruptcy has a negative connotation, it can be a lifeline for those who have fallen behind on their mortgage payments. In places like Long Island, where housing prices are steep, Chapter 13 can be a practical solution to avoid foreclosure.
The Role of a Bankruptcy Attorney
Filing for bankruptcy is a legal process that requires expertise, and that’s where a bankruptcy attorney steps in. They guide you through the process, ensuring that everything is done correctly and in a timely manner. On Long Island, a local attorney can also offer insight into regional courts and how they handle bankruptcy cases, making them a crucial ally in your case.
How Chapter 13 Bankruptcy Works
Chapter 13 works by allowing you to reorganize your debts and set up a repayment plan. This plan is based on your income and ability to pay, spreading payments out over several years. The court must approve the plan, and once it’s in place, you’ll start making monthly payments to a bankruptcy trustee, who then distributes those payments to your creditors.
Chapter 13 and Home Foreclosure: How it Helps
One of the most powerful protections Chapter 13 offers is the automatic stay. As soon as you file for bankruptcy, the court issues an automatic stay that halts all collection activities, including foreclosure proceedings. This means that your lender cannot foreclose on your home while your case is pending, giving you valuable time to work out a repayment plan and get caught up on your mortgage.
Eligibility for Chapter 13 Bankruptcy
To qualify for Chapter 13, you must have a regular income that allows you to make payments under a court-approved plan. Your debts also must not exceed certain limits. Chapter 13 is generally available to individuals with secured debts of less than $1,257,850 and unsecured debts of less than $419,275.
How Chapter 13 Bankruptcy Saves a Family Home
Chapter 13 can save your home by stopping foreclosure and allowing you to pay back missed mortgage payments over time. You can continue to make regular payments on your mortgage while chipping away at any arrears. Additionally, if you have other debts, Chapter 13 may reduce or eliminate them, freeing up more money for your mortgage payments.
The Process of Filing for Chapter 13 on Long Island
Filing for Chapter 13 requires completing several forms and submitting them to the bankruptcy court. You’ll need to gather financial documents like tax returns, bank statements, and a list of all debts and assets. After filing, the court schedules a meeting with creditors, and your attorney will negotiate the terms of the repayment plan.
Challenges Families Face During a Chapter 13 Bankruptcy
While Chapter 13 offers significant advantages, it’s not without its challenges. Sticking to a repayment plan for several years can be tough, especially if unexpected expenses arise. Families must be prepared for the discipline required to manage their finances during the repayment period.
Common Myths About Chapter 13 Bankruptcy
Many misconceptions surround Chapter 13 bankruptcy. A common myth is that filing for bankruptcy means losing your home, but Chapter 13 is specifically designed to help you keep it. Another myth is that bankruptcy will ruin your credit forever. While it will affect your credit, it’s possible to rebuild your score after completing the repayment plan.
The Benefits of Chapter 13 Over Chapter 7
Chapter 13 offers several advantages over Chapter 7, especially if your goal is to keep your home. Chapter 7 involves liquidating assets, which could include your house. In contrast, Chapter 13 allows you to keep your home and other property, provided you make regular payments under the repayment plan.
Hiring a Bankruptcy Attorney on Long Island
When hiring a bankruptcy attorney, it’s essential to find someone who understands the local legal landscape. A local attorney will have experience working with Long Island courts and trustees, which can be a significant advantage. You’ll also want to consider the cost of hiring an attorney, but remember that the right attorney can save you thousands in the long run by helping you keep your home.
Conclusion
Chapter 13 bankruptcy can be a lifesaver for families on Long Island facing the threat of foreclosure. It allows you to stop foreclosure, reorganize your debts, and keep your home. However, navigating the bankruptcy process can be complicated, which is why having a skilled bankruptcy attorney is so important. With their help, you can take control of your financial future and protect your family’s home.
FAQs
1.What happens if I can’t keep up with the repayment plan?
If you can’t keep up with the payments, your case may be dismissed, and creditors may resume collection efforts, including foreclosure.
2.How long does a Chapter 13 bankruptcy stay on my credit report?
A Chapter 13 bankruptcy stays on your credit report for seven years from the filing date.
3.Can I still sell my house while in Chapter 13 bankruptcy?
Yes, but you will need court approval to sell the property during the bankruptcy process.
4.What happens to my credit card debt in Chapter 13?
Credit card debt is usually included in the repayment plan, and you’ll make payments based on what you can afford.
5.Is Chapter 13 bankruptcy public record?
Yes, bankruptcy filings are public records, but it’s unlikely that anyone will seek out this information unless they have a reason to.
