Chapter 13 Bankruptcy in Queens – Getting Your Case Confirmed
Chapter 13 bankruptcy is often referred to as a “wage earners plan.” What does this mean? Because many chapter 13 filers make a little too much income to qualify for chapter 7 bankruptcy, they propose a repayment plan with the help of their lawyer. For example, you may propose to pay back 5% of your credit card debt over a 5 year period.
The court then reviews the terms under which you suggest paying back some of your unsecured debts, essentially evaluating whether the payments are big enough based on your current income. Note that, although payments can go up or down based on how much money you make and what stuff you own, in many cases, debtors pay pennies on the dollar to their creditors in a chapter 13 plan. The process of haggling over exactly how much you’ll pay each month to creditors is called the confirmation process.
The goal of a Chapter 13 case is to have a plan confirmed by the court. For an explanation of Chapter 13 itself, see our Chapter 13 page on this web site. To get the case confirmed, one of the things you need to do is show the court you are making your best effort at paying back what you can to your creditors.
While the court will allow you to keep enough of your earnings to pay your bills each month, it needs to know what your income actually is to determine what you can keep and what you should pay.
How much you actuallly earn is determined by looking at your payment advices. Another way is to look at your bank statements and see if any money is going into your account that is not from your paychecks. This can be tricky because there may be deposits on your statement that are from other sources.
Obviously, if the deposits are from a second job, or off-the-books work, that is income that needs to be reported on your schedules. However, it is often the case that these extra deposits are such things as transfers from savings accounts, reimbursements from health plans, gifts from relatives and the like.
The important thing is to give an explanation for each of these extra deposits, and provide documentation when possible. When that is done, this hurdle to confirmation can be easily overcome.
Chapter 13 can provide an incredible opportunity for someone in financial distress and knowing how to have the case confirmed is very important.
Allan Bloomfield practices bankruptcy law in Forest Hills, Queens. Contact Allan today for a free consultation.