Chapter 13, known as reorganization, might make the most sense for you if you have significant assets that you wish to keep.
New York law and federal law exempt certain property in bankruptcy cases, which means that a debtor gets to keep it. There are limits to the value of property protected by exemption, however. If you own a home or car that is paid off, or stock or collectibles or anything else that is worth a good amount, Chapter 7 bankruptcy (liquidation) could require that you give up these assets to pay off your debts.
In Chapter 13, your debts will be reorganized – not liquidated. You’ll still need to pay on them – just under a new repayment plan. But under Chapter 13, you’ll get to keep assets you would have had to have sold off had you filed Chapter 7 and eliminated your debts.
Chapter 13 can also stop the accrual of interest on any tax debt you might be carrying.
A Chapter 13 repayment plan typically lasts three to five years. After this time, if you have held to the terms of the plan, your remaining dischargeable debt should be released.
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