Discover how a Chapter 13 case can be your lifeline out of debt. Learn the essentials with the Law Offices of Wenarsky and Goldstein, LLC and start your journey to financial stability now.
Filing for Chapter 13
Many families in New Jersey are dealing with economic hardship. The American Bankruptcy Institute (ABI) reports that 9,977 people filed for personal bankruptcy protection in New Jersey in 2021. Most of these personal bankruptcies are Chapter 7 cases—but 25 percent of personal bankruptcy filers in New Jersey filed for Chapter 13 bankruptcy protection in 2021.
A Chapter 13 bankruptcy is also sometimes referred to simply as a “wage earner’s plan.” A successful Chapter 13 bankruptcy petition allows the filer to roll many (or all) of their debts into a single, affordable monthly payment.
So, if you are overwhelmed with debt but have sufficient income to make at least partial repayment to creditors, Chapter 13 may be the right fit. Moreover, it can be a good choice if you have certain assets in your possession you don’t want to lose.
By filing under this chapter, you’ll get to keep your property and pay off most of your debts over a period of several years without all the pressure. However, you have to be eligible to file under this chapter.
Here, our New Jersey personal bankruptcy attorney explains the most important things to know about Chapter 13 bankruptcy cases, including the process, eligibility requirements, and the mechanics of repayment plans. Explore how Chapter 13 can offer a sustainable solution to regain financial stability.
Chapter 13 Bankruptcy Cases: Understanding the Basics
In contrast to a Chapter 7 liquidation bankruptcy, a Chapter 13 bankruptcy involves a repayment plan. As a general rule, the Chapter 13 bankruptcy process exists for those who have regular income but who are currently overwhelmed by a burdensome and unsustainable level of debt.
Chapter 13 bankruptcy allows for debts to be rolled into a repayment plan through which the debtor can resolve the matter over a reasonable period of time—usually three to five years.
Practically, it allows you to reschedule repayment of most secured debts and extend them throughout the Chapter 13 plan. That way, your monthly payments may be lower than they would be if you didn’t file Chapter 13 bankruptcy. However, the specific circumstances of the case always matter.
Chapter 13 is available to more people and families than Chapter 7. Unlike with Chapter 7 bankruptcy, there is no income limit for Chapter 13 bankruptcy. You can file a Chapter 13 case even if your income is too high to file for Chapter 7 bankruptcy protection.
However, to qualify for Chapter 13 debt relief, your total secured and unsecured debts combined have to be less than $2,750,000.
An Overview of Chapter 13 Repayment Plans
When you enter the Chapter 13 bankruptcy process, you will end up with a repayment plan. Indeed, the first month after a Chapter 13 case is filled, the debtor is required to make their initial payment. Chapter 13 repayment plans must conform to certain legal standards. As explained by the United States Bankruptcy Court for the District of New Jersey, a Chapter 13 bankruptcy repayment plan must:
- Provide for the payment of fixed amounts on a regular (usually monthly) basis;
- Ensure that certain types of debts—child support, back taxes, etc—are paid in full; and
- Treat all claims fairly across the different classes of creditors.
A Chapter 13 repayment plan invariably results in a lower monthly payment for the filer. This may be achieved in several ways—including the elimination of interest, waiver of fees/penalties, and potentially even the forgiveness of principal. The longest a Chapter 13 repayment plan can last in New Jersey is five years. If all payments are made in a timely manner, the debts covered by the Chapter 13 repayment plan will be fully resolved.
How to File for Chapter 13 Bankruptcy?
The case begins with filing a petition with the bankruptcy court in the area where the debtor resides. After filing Chapter 13, an impartial bankruptcy trustee is appointed to administer your case. However, the filing procedure may not be as easy as you hoped. The debtor also has to file other documents, such as:
- Certificate of credit counseling
- Chapter 13 plan for debt repayment
- Monthly net income
- Employer’s evidence of payment
Furthermore, to complete all the bankruptcy forms that have to be filed, the debtor has to compile a list of creditors and the amounts owed, the debtor’s detailed living expenses, as well as the frequency of the debtor’s income.
Even though you don’t need a bankruptcy lawyer to file Chapter 13 bankruptcy, having one by your side can increase your chances of resolving your case successfully.
Call Our New Jersey Chapter 13 Bankruptcy Attorney for Immediate Help
Chapter 13 bankruptcy offers a lifeline for individuals with regular income who find themselves battling overwhelming debt. Unlike Chapter 7’s liquidation approach, Chapter 13 enables debtors to manage their financial obligations through a structured repayment plan over three to five years, without stringent income limitations.
At the Law Offices of Wenarsky & Goldstein LLC, our personal bankruptcy lawyer has extensive experience handling Chapter 13 cases. If you have questions or concerns about the Chapter 13 bankruptcy process, we are here to help. Call us to arrange your strictly private consultation. With law offices in Ledgewood, NJ, and New York City, we provide personal bankruptcy representation in New Jersey and New York.
