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FRIENDLY, AFFORDABLE AND KNOWLEDGEABLE Chapter 7 Chapter 13 Loan Modifications

Pros and Cons of Declaring Chapter 13 Bankruptcy

When Long Island borrowers fall behind on bills and can no longer make their minimum monthly payments, they usually consider calling a Long Island bankruptcy attorney and filing for relief. The two bankruptcy options available are Chapter 7 or Chapter 13. Depending on your situation, either option may be the answer you need to move forward and repair your financial life.

One of the mistakes many people make is waiting too long to seek out help. You can stop aggressive collection action before you have your car repossessed or a bank account frozen. These types of disastrous events can be prevented by seeking relief by the courts.

These legal options are designed to stabilize families who have suffered a financial disaster. That does not mean you don't have some work to do. It is important to organize all of your financial paperwork before calling your attorney. There will be a lot of questions. But, they are there to help you out.

Chapter 13 is the bankruptcy of choice for people who are seeking to protect property or who earn high incomes. Borrowers who don't have any assets and earn modest wages will probably choose to file for Chapter 7 bankruptcy relief so that they will be forgiven of all financial obligations immediately, except for bills that are not eligible under the Chapter 7 statutes.

For Long Island debtors who earn less than the state median income, the Chapter 13 repayment plan requires debtors to pay back creditors over a three-year period. In cases where a debtor earns more than the state median income, it is customary for the plan to span a full five years.

The law stipulates that the payment period is never more than five years. First, you’ll be expected to propose a realistic payment plan to the court for a legal discharge of your financial obligations. The plan is reviewed by your creditors and the court. The criteria used to judge the plan is feasibility, intentions and compliance with the law. The process usually takes about six months from beginning to end.

While there is no perfect solution to being overextended, there are some legal remedies. Reviewing the pros and cons of your situation is always a good idea. It is recommended that you call our Long Island bankruptcy office to examine the details of applying to the court for help. It is a tough call to make, but our bankruptcy team will be the first to tell you that it makes sense for many people who have lost all hope and need some help.

Pros of Declaring Chapter 13 Bankruptcy


  • Chapter 13 bankruptcy filing stops foreclosure proceedings and payments.
  • Debtor is not required to have any contact with creditors.
  • Creditors must stop contacting the debtor.Debtor can maintain possession of their property.Loan cosigners are protected against collection.
  • Court appointed trustees are often flexible on payment terms.
  • You are allowed to file repeatedly.
  • Creditors can't demand that you pay your total obligation after completing the repayment plan.
  • Debts related to a business that you signed for personally can be included in the plan.
  • If your income goes down, then you might be able to modify the plan.

Cons of Declaring Chapter 13 Bankruptcy


  • You must till pay alimony, child support, student loans and unpaid taxes.
  • Companies can't file, only individuals can.It will be difficult to get a mortgage.
  • You must pay off the majority of your debt.You must discuss your financial situation with a trustee or judge and explain what happened.
  • You will no longer be authorized to use your credit cards.
  • You will have to prove you have steady income to repay your creditors.
  • You must pay for courses and court fees.
  • An attorney must be hired.You must take and successfully complete credit counseling courses.
  • The trustee and creditors may not agree to your proposed repayment plan.If payments are not made promptly, your case could be dismissed.
  • You are responsible for providing paperwork about all your debtors, property, income, living expenses and tax information.
  • Your credit report will be negatively impacted by filing for seven years.

Chapter 13 Bankruptcy Summary:


Bankruptcy is not for everyone. Some people can negotiate and renegotiate with lenders, consolidate bills, and juggle their finances for decades. This type of activity takes its toll on your health and your family. Typically, there will be a time when most people will feel the need for some relief.

The good news about going through the court system for help is that all agreements are legally documented so there can be no dispute about what was decided. Loan modification plans and other remedies that are pursued by desperate people have been known to blow up at times, leaving a person in financial distress and worse off then they were before they began the negotiation process.

The good news is that after a Chapter 13 plan is completed any obligations that have not been repaid are no longer owed. While it can be a bit embarrassing to file, it is often the only answer, and a weight and burden is immediately removed. What people never realize is that filing for relief is not only legal, it is highly recommended to save your family from suffering more than is necessary.

What many Long Island consumers fail to realize is that this legal remedy was put in place to help honest people who have suffered from financial difficulties. Medical expenses, job loss and other unforeseen circumstances can leave any person in dire straits. No one should have to suffer the rest of their life because they were laid off or had to pay for a family medical emergency that was not covered under insurance.

Most Long Island families are only a job loss away from being in the same boat. There is no reason to suffer any longer than necessary. After reading about your options, then give yourself the gift of starting down a path to recovery and contact The Law Offices of Adam C. Gomerman in Huntington, NY.

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