Five Things to Know About Chapter 13 Bankruptcy

“Bankruptcy” can sound like a scary word to people who are in financial distress. Some people would rather suffer and lose everything rather than consider bankruptcy. And yet, it can be a major lifeline for individuals struggling with debt, and in the case of Chapter 13 bankruptcy, you may not need to even adjust your lifestyle that much. Here are five things you should know about Chapter 13 bankruptcy:

  1. You don’t need to lose everything, but you do need a plan
    • The primary thing that differentiates Chapter 13 bankruptcy from the more extreme Chapter 7 is that you do not necessarily need to get rid of much of your property to satisfy your debts. However, you do need to devise a so-called “wage earner’s plan” with help from a bankruptcy attorney, which will create a plan for paying off your debts over the course of three to five years. Following this plan is necessary to receive the benefits of a Chapter 13 bankruptcy.
  2. You receive protection from creditors
    • As with all forms of bankruptcy, a Chapter 13 bankruptcy provides you with bankruptcy protection. In practical terms, this means that creditors can no longer go after you personally, and anyone who wants to get something from you must first go through the court. While you are going through the bankruptcy process, you do not need to worry about phone calls from debt collectors, nor do you need to worry about your things being repossessed.
  3. You do not need to worry about losing your home
    • While you are going through the bankruptcy process, you cannot be evicted from your primary residence. If your primary residence is a house, then you cannot be foreclosed on, and any ongoing evictions or foreclosures stop the moment bankruptcy begins. Thus, you do not need to worry about losing your home, at least while the bankruptcy process is ongoing.
  4. You lose control of your finances
    • When you declare bankruptcy, all of your assets are placed in the care of a bankruptcy trustee, who reports directly to the court. This trustee handles all of your financial matters, including paying your creditors and ensuring you remain on track with your wage earner’s plan. If you want to take out any new loans or credit cards, you must first receive the approval of the court.
  5. You can get rid of most or all of your debt
    • So long as you keep to the plan, when the process is completed, most or all of your remaining debt will be discharged. This means that creditors can no longer go after you to force you to pay it back. While certain types of debt, such as student loans and child support payments, are exempt from being discharged, you will otherwise be free of debt the moment you are done with the process.


Bankruptcy is a complicated and stressful process, and one you shouldn’t attempt to undertake on your own. If you are in severe financial distress and considering bankruptcy, call us at 631-348-1702, or visit our contact page. Our offices are conveniently located in Central Islip, right here on Long Island. Our bankruptcy attorneys will work with you to ensure the best possible outcome for you and your family, and make sure that you gain the maximum possible benefit from bankruptcy protection.


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