Can I File for Bankruptcy if I Have a Judgment?
A Chapter 13 Bankruptcy is for families that have assets, value in their home, or earn above the median family income for New York State. A Chapter 13 Bankruptcy allows you to keep all your assets while under the protection of the Bankruptcy Court, and our seasoned bankruptcy attorney has extensive experience guiding clients through this process. In exchange for keeping your assets, the Bankruptcy Court requires a Chapter 13 Debtor to submit to a “Plan” over the course of 3 or 5 years. The Plan will allow you to catch up on your mortgage payments and automobile payments while stopping your creditors from all collection activities.
Under a Chapter 13 Plan, Debtors repay their unsecured creditors only what they can afford to pay based upon their income and expenses. “Unsecured” debt includes credit cards, medical bills, personal loans, or debts owed on old car loans. “Unsecured” debt is repaid anywhere from 2% to 100% over the Plan. Once a Chapter 13 Plan is completed, all remaining debt is eliminated (“discharged”).
If you are in a financial situation that calls for Bankruptcy Protection, it is important to have quality legal support to help you make informed decisions on these important matters. As soon as you file a Chapter 13 Bankruptcy, the Bankruptcy Court imposes an injunction on all your creditors called the “Automatic Stay”. The Automatic Stay prohibits creditors from any collection activities, including lawsuits, wage garnishments, collection calls, collection letters, bank restraints, foreclosures, or repossessions. Contact our firm.
Which of my debts will not be eliminated?
“Non-dischargeable” debt under the Bankruptcy laws includes recent income taxes, student loans, alimony, child support, restitution or compensation ordered by a Criminal Court, civil judgments for injuries due to intentional torts or driving while intoxicated, and any debts incurred by fraud.
Can I Strip the Second Mortgage off my Property in a Chapter 13 Bankruptcy?
Yes, but only if your first mortgage exceeds the value of your home (your home is “underwater”), and you must complete your Chapter 13 Plan. In a Chapter 13 Bankruptcy case, your attorney submits a Chapter 13 Plan to the Court to prove to the Court that you can maintain your assets and pay your creditors over a three- to five-year period (even at a reduced rate). Then, a “Confirmation Hearing” before the judge will be scheduled. At this hearing, the Bankruptcy Trustee and the Court will either confirm your Plan or recommend changes to your Plan. The Confirmation Hearing usually lasts from five to fifteen minutes. In almost all cases, your Bankruptcy attorney and the Bankruptcy Trustee will have communicated with one another before the hearing to determine what changes, if any, to your Plan are necessary.
In a Chapter 13 case, once your Plan is confirmed by the Court, then you will have three to five years to complete your Chapter 13 Plan. At the end of the three- to five-year period, you will receive a discharge of all remaining debt.
Can I keep my bank account?
You may keep as much money as you wish in your bank account. The reason for this is that under a Chapter 13 Plan, you are paying your creditors (albeit at a reduced amount). Therefore, the Bankruptcy Court does not sell a Debtor’s assets in a Chapter 13 case, though the Bankruptcy Code requires your Plan to pay unsecured creditors at least what they would have received had those assets been sold in a Chapter 7 case.
Can I keep my pensions, IRAs, and retirement accounts?
Under the Bankruptcy law, IRA’s, pensions, or profit-sharing plans, or other retirement plans protected as Individual Retirement Accounts, are exempt from your Bankruptcy case. Therefore, you can hold unlimited funds in a pension or 401(k), and up to $1,711,975 in traditional and Roth IRA’s, even though you are filing a Chapter 13 Bankruptcy.
May I keep my house under a Chapter 13 Bankruptcy?
Yes. Under a Chapter 13 Plan, you must prove to the Court that you have sufficient income to once again start paying your monthly mortgage payments. You must also prove to the Court that you can pay the past-due amounts to your mortgage lender (“arrears”), spread out over a 3-5-year period, on the terms your note and New York law require, or obtain a loan modification. If you can restart your monthly mortgage payments and pay the arrears over 3-5 years, then your mortgage lender is prevented from foreclosing on your home.
What a Chapter 13 Plan Can and Cannot Do to Your Mortgage
A Chapter 13 Plan can cure arrears on the mortgage for your primary residence over the life of the Plan, and it can strip off a wholly unsecured second mortgage. It cannot reduce the interest rate, cut the principal, or extend the term on a loan secured only by the home you live in. Section 1322(b)(2) of the Bankruptcy Code protects those terms, so any change to them has to come from a loan modification your lender agrees to. Mortgages on investment property and second homes are not covered by that restriction.
Am I eligible for a Chapter 13 Bankruptcy?
To file a Chapter 13 Bankruptcy, you must be an individual (no corporation, business, or partnership), you must have a regular income that is stable enough to fund the payments your Plan requires, your unsecured debts may not exceed $526,700, and your secured debts may not exceed $1,580,125. These debt limits apply to cases filed between April 1, 2025 and March 31, 2028.
Will the IRS be notified of my Bankruptcy case?
Yes. However, even the IRS must stop its collection actions once a Bankruptcy Petition is filed. However, since most tax debt is non-dischargeable, any claims by the IRS against you must be paid through the Chapter 13 Bankruptcy Court.
With over 35 years of experience, The Law Offices of Allen A. Kolber, Esq. has the skill and experience to guide clients in the Lower Hudson Valley through the Chapter 13 Bankruptcy process. If you need a helping hand from a knowledgeable and effective attorney, contact The Law Offices of Allen A. Kolber, Esq.
Where Rockland County Residents File for Chapter 13 Bankruptcy
Chapter 13 cases are filed in federal court, not the local county courthouse. If you live in Rockland County, your case is filed with the White Plains Division of the United States Bankruptcy Court for the Southern District of New York, which serves Rockland and Westchester counties. The White Plains courthouse is located at 300 Quarropas Street, White Plains, New York 10601. Your Confirmation Hearing and any meeting of creditors are generally scheduled through this division, so it helps to work with an attorney familiar with its local rules and Chapter 13 plan procedures. Current filing information is available from the U.S. Bankruptcy Court for the Southern District of New York.
Contact a Rockland County Chapter 13 Bankruptcy Attorney
The Law Offices of Allen A. Kolber, Esq. effectively represents clients facing Bankruptcy in Rockland County and all of New York State. Our firm understands the stress one can feel when facing a difficult financial future. Our compassionate staff will work to ease your fears and help you make a new start. If you need quality legal support, contact a Chapter 13 bankruptcy attorney from The Law Offices of Allen A. Kolber, Esq.
