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HOW DOES A CHAPTER 13 BANKRUPTCY WORK?


A Chapter 13 Bankruptcy is usually used by debtors who have assets above and beyond the allowable exemptions. Also, a debtor may file a Chapter 13 Bankruptcy because he has income over and above the allowable NYS Median Income for the size of the debtor’s household.

In a Chapter 13 Bankruptcy a similar petition to that of a Chapter 7 Bankruptcy is prepared, filed with the Bankruptcy Court and the automatic stay is created.

However in a Chapter 13 Bankruptcy a “Plan” is filed in which it proposes to pay a certain amount to creditors on a monthly basis. This amount is determined by the amount of debt owed, the kind of debt the debtor owes and the debtor’s available monthly disposable income.

These payments are made as monthly payments paid to the Chapter 13 Bankrtupcy Trustee, who then distributes them to creditors on your behalf.

Chapter 13 Bankruptcy plans can last as long as 3-5 years depending on the amount of debt and the amount of disposable income.



Castro Law, PLLC

82-11 37th Avenue, Suite 603

Jackson Heights, NY 11372

Tel: 718.533.8090


















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