Although bankruptcy does eliminate your debts at least to some degree in New York, you do still have obligations during the process. When you’ve filed for Chapter 13 bankruptcy, you have agreed to pay back your creditors within three to five years. If your income is higher than your state’s median income, you may have up to five years to repay the debt, while you will only have three years if you earn less than the median income in your state.
You must file several documents and forms with the court as part of your bankruptcy petition. First, you need a credit counseling certificate of completion. If you’ve made a repayment plan, then that also needs to be included. Next, you must show a copy of your most recent tax return along with proof that you filed taxes over the last four years. Finally, you need to show the court your Chapter 13 repayment plan.
You do have to pay to enter into bankruptcy, which is why it should be reserved only for people with higher amounts of debt or debt that is completely unaffordable. The filing fee is $235, and this is accompanied by an administrative fee of $39. These fees can be paid in installments if necessary, making it more affordable for you to enter into bankruptcy.
Once your Chapter 13 bankruptcy plan is approved, you must start making payments to your creditors. You need to start within 30 days of filing for Chapter 13 bankruptcy, following the proposal and payment method you provided to the court.
If all of this seems overwhelming, it may be wise to speak with someone who understands your legal situation. With the right help, you can manage bankruptcy and come out of it stronger financially.
Source: FindLaw, “What are a Debtor’s Obligations under Chapter 13?” Nov. 13, 2014by