Contrary to popular belief, filing for bankruptcy doesn’t necessarily mean starting over. Many people are familiar with Chapter 7 bankruptcy or a “fresh start” bankruptcy where most assets are liquidated to pay off debt, but if you have regular income and you qualify, there may be another option. Chapter 13 bankruptcy enables you and your attorney to propose a Chapter 13 Plan to the Court and the Chapter 13 Standing Trustee (who represents the unsecured creditors) to develop a single payment plan. If the Plan is confirmed, as long as you keep your payments current, you can emerge from Chapter 13 bankruptcy in three to five years.
What You Should Consider Before Filing Chapter 13
Filing for Chapter 13 Bankruptcy is a serious financial decision. Individuals often elect to file for bankruptcy for a variety of financial reasons, but primarily among them is the fact that sometimes individuals find themselves behind on paying certain debts due to unemployment, underemployment, or other life challenges. Whatever your reasons for seeking out bankruptcy, Chapter 13 bankruptcy offers individuals the legal ability to discharge certain debts. According to the District of New Jersey’s Debtor Assistance Resource Guide, individuals are strongly encouraged to speak to an attorney before pursuing bankruptcy.
Why You Need a New Jersey Bankruptcy Attorney
The process is often complex, and individuals are required to sign forms that must be truthful and accurate under the penalty of perjury. Failure to properly file these forms can result in the case being dismissed and can also harm a person’s ability to file for bankruptcy in the future. A bankruptcy lawyer can help to ensure that you properly submit all paperwork to the courts and that you receive appropriate credit counseling before you file. It is incredibly important that you meet the requirements to file for Chapter 13 Bankruptcy. You can lose certain protections offered by the law by improperly filing for bankruptcy the first time. An experienced bankruptcy lawyer can help you determine whether you meet all requirements to file for Chapter 13 Bankruptcy. Stuart M. Nachbar, Esq. has over 20 years of experience helping individuals in debt file for bankruptcy. If you’re facing financial hardship, you don’t need to suffer alone.
What is Chapter 13 Bankruptcy?
Individuals who have a steady income can choose to file for Chapter 13 Bankruptcy. During this kind of bankruptcy proceeding, individuals are required to submit to the court a plan to repay their debts. The court must approve the plan and the proposed monthly amounts included in the plan. One of the benefits of filing for Chapter 13 Bankruptcy is that, once you file, creditors are no longer allowed to collect debts, foreclose, or repossess your vehicle without special permission of the Court. Creditors are also not allowed to garnish your wages or take legal action against you. There are limits to the amount of debt a person may carry when filing for Chapter 13 Bankruptcy. The limits depend on the kind of debt carried.
The Chapter 13 Process in New Jersey
When you file for Chapter 13 Bankruptcy, you will be required to submit certain forms and documentation to the court. For instance, a debtor must file an itemized statement of monthly income. Income includes gifts, and all other sources of income. A statement of income as well as a statement of projected monthly expenses must also be submitted to the court. It is important that this paperwork is filed accurately, in order to ensure that the bankruptcy isn’t dismissed and to make sure all statements issued to the court are factual and true. Next, the debtor must document all property owned. Finally, if an individual plans to use exemptions for certain property, this property must be properly documented.
Exempt Assets: New Jersey v. Federal
Certain property is exempt from Chapter 13 Bankruptcy. Individuals can elect to use federal bankruptcy exemptions or New Jersey’s exemptions. New Jersey’s exemptions include disability benefits, most kinds of life insurance benefits, a car’s value up to $1,000, clothing, unemployment benefits, worker’s compensation benefits, and owned cemetery plots or funeral plans. Federal benefits include the federal homestead exemption which is designed to allow you to protect and retain your primary home. Individuals are allowed to keep equity in their homes up to $22,975. Additionally, federal exemptions protect a car valued up to $3,675. Jewelry, tools, books, and certain property is also protected. A bankruptcy attorney can help you review your assets and determine the best course of action to protect your exempt property.
Finally, you’ll be required to compile a list of all creditors. It is important that this list be complete, or certain debts may not be discharged by the bankruptcy. Depending on how many creditors you have, the court may require you to submit this information in writing or via a CD or disk. Failure to properly submit all information can result in a delay of the bankruptcy or can even result in the case being dismissed. Because the process and paperwork is complex, most individuals who file for Chapter 13 Bankruptcy seek the advice of a skilled bankruptcy lawyer. Stuart M. Nachbar, Esq. has been helping individuals settle their bankruptcies efficiently, and effectively for over 20 years.
What Must I Include in a Chapter 13 Bankruptcy Repayment Plan?
A Chapter 13 Bankruptcy repayment plan generally has a duration of anywhere from 3 to 5 years. The plan must include a clear monthly amount that will be paid to a trustee who will then pay creditors. The plan must also show that the debtor will pay all child support and taxes in full. Additionally, the plan must include equal monthly payments for mortgages and car debts. A debtor may classify certain claims, but each claim must receive equal treatment with regards to repayment. Certain debts must be paid in full, while others may receive a percentage of their outstanding balance. A Chapter 13 Bankruptcy Attorney can help individuals draft a repayment plan that will be approved by the court.
There are certain debts that are exempt from the Chapter 13 Bankruptcy process. These include:
• Alimony debts
• Child support debts
• Most student loans
• Personal injury debts, if related to alcohol or drugs
• Criminal fine debts
It is important that these non-dischargeable debts be taken into account when filing a bankruptcy repayment plan. A skilled Chapter 13 Bankruptcy attorney can help to ensure that the plan is accurate and will be accepted by the court. Stuart M. Nachbar, Esq. can review your debts, finances, and income and help you develop a plan that will allow you to move forward with Chapter 13 Bankruptcy.
Frequently Asked New Jersey Chapter 13 Bankruptcy Questions
Can I keep my house under Chapter 13?
You can use Chapter 13 to prevent a foreclosure. Part of your three-year to five-year repayment plan can be used to make up mortgage payments and keep you current. It’s important to discuss this with your bankruptcy lawyer before your home goes into foreclosure.
Why do I need an attorney for Chapter 13?
All bankruptcies are complicated, but Chapter 13 requires you to develop a repayment plan. This means negotiation with the Chapter 13 standing Trustee, and resolution of any objections to your proposed Chapter 13 Plan by creditors who would prefer to be fully reimbursed for your debt. An experienced bankruptcy lawyer knows how to negotiate down your outstanding debts to manageable levels and to get your plan approved by the court.
How does the automatic stay work in New Jersey?
When you file for bankruptcy, the court issues an automatic stay. This prevents creditors from pursuing your debt while the stay is in force. As long as you make timely payments on your repayment plan, your creditors cannot pursue the debt outside of the agreement.
What are non-dischargeable debts in New Jersey?
These are debts that cannot be discharged by completion of your repayment plan. They must be paid in full. In New Jersey, most taxes, child support, spousal support, government fines or penalties, student loan debt, HOA fees, court-ordered restitution for crimes, and obligations for a personal injury lawsuit involving a DUI accident are all non-dischargeable.
How are my plan payments determined?
Your payment is going to be based on the amount of debt you owe, your disposable monthly income, the type of the debt and any resolution with your creditors who may object to the proposed plan. Any payment plan must be approved through the bankruptcy court. A skilled NJ bankruptcy attorney can give you the best odds of a speedy resolution.
Freedom From Debt
If you’ve been burdened by unpaid bills and debt collectors, Chapter 13 Bankruptcy might be the solution for you. Of course, bankruptcy is not for everyone and it comes with certain financial consequences. A Chapter 13 Bankruptcy lawyer can review the personal details of your case and help you find a financial solution that works for you. Contact Stuart M. Nachbar, Esq. today to learn about your rights and obligations when filing for Chapter 13 Bankruptcy.