What You Need to Know About Chapter 13 Bankruptcy in Orange County

There are many myths surrounding the bankruptcy process. Debtors are often unaware of the various options available to them. Many U.S. bankruptcy laws enable debtors to eliminate their debt and find financial relief. The Law Office of Michael D. Pinsky, P.C. can help you determine if Chapter 13 will best suit your needs. Read on and reach out to our experienced Orange County bankruptcy attorney to learn more about Chapter 13 bankruptcy in NYS.

Who is eligible for Chapter 13 Bankruptcy?

Individuals with ‘regular income’ whose unsecured debts are less than $419,275 and whose secured debts are less than $1,257,850 are eligible for relief under Chapter 13. Corporations, LLC’s or partnerships are not entitled to relief under Chapter 13. Debts that are not contingent and liquidated in amount can be included.

How much of my debt will I have to repay in Chapter 13?

Chapter 13 debtors are required to commit to a repayment plan over a period between 3 and 5 years. The applicable commitment period is determined by a means test under Bankruptcy Code § 1325(b)(4). Under this code, if a debtor’s current monthly income is greater than the median income for the debtor’s household size in New York, then the commitment period is 5 years. If not, the period is 3 years, however, a debtor can elect to increase the plan period to 5 years if needed.

What powers do I have under Chapter 13?

Chapter 13 debtors may:

  • Sell property
  • Borrow money
  • Assume or reject leases
  • Surrender property
  • Divide unsecured claims into their secured and unsecured components based on the value of the collateral securing the claims
  • Strip off entirely unsecured junior mortgages and liens on a primary residence
  • Sue to recover money on property for the benefit of the bankruptcy estate

The Chapter 13 “Pot Plan”

Payment plans in Orange County are not based on what you owe. Holders of unsecured claims share Chapter 13 plan distributions after paying Chapter 13 trustee fees, domestic support obligations, attorney fees, recent taxes, past due mortgage installments, car payments, etc. The leftover money after one pays priority and secured arrearage claims can be coined as a pot. The percentage of money left over in the pot after the priority and secured claims have been paid determines an unsecured creditor’s share. Factors such as the number of different kinds of claims, the size of a debtor’s monthly plan payments, and the length of the plan can impact the percentage distribution on unsecured claims.


Michael D. Pinsky, P.C. represents clients in bankruptcy actions and related matters. Please call 845-394-2616 or contact the firm online to schedule a consultation.

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