If you have a steady income but find yourself struggling to pay your bills, Chapter 13 bankruptcy may be the answer for you.
Under Chapter 13, you repay your debts over a three- to five-year period. At the end of the payoff time, some or all of your debts may be discharged by the courts.
In Chapter 13 bankruptcy, petitions are filed in federal court that explain your debts, income and assets. Just like in Chapter 7 bankruptcy, a trustee is appointed to your case. However, in Chapter 13, a repayment plan is submitted to the trustee that allow you to spread any past due balances over a three- to five-year period while you continue to pay your current payments on time.
The trustee and your creditors review your submitted plan. Your creditors are permitted to object to the plan, but once it is approved, you keep any property you own and make scheduled payments.
One of the benefits of Chapter 13 bankruptcy is that an automatic stay is issued by the court, forbidding creditors from continuing any collection practices. This includes phone calls, letters and the addition of late fees or interest.
You and your attorney are able to create a repayment plan that keeps you from getting further behind while allowing your creditors to collect a portion of what they are owed. If a creditor ignores the automatic stay, they are in violation of a court order and may face fines. In fact, they may be required to pay you for their violation.
In some cases, unsecured debt may be discharged so that you are no longer obligated to repay it. At the end of your repayment period, the bankruptcy is discharged and you are able to move on with a clean financial slate.
After the discharge, a creditor may report incorrect information to credit reporting agencies. It is important to review your credit report and contact your bankruptcy attorney if you find any information that is incorrect as this may also be viewed as a violation of the court order.
While there are some similarities between Chapter 7 and Chapter 13 bankruptcies, there are still several unique aspects to filing for bankruptcy under Chapter 13. For example, while filing under Chapter 7 typically means that you will have to give up some of your assets to pay your creditors, this “liquidation” is not a part of the process under Chapter 13.
Instead, the Chapter 13 bankruptcy process focuses on developing a repayment plan that allows you to pay off your creditors over time. Working with your New Jersey Chapter 13 bankruptcy lawyer, you will develop a repayment plan that is custom-tailored to your income. This ensures that your plan reflects your ability to pay, and it allows you to move forward knowing that you can manage your finances on an ongoing basis.
Here is a brief overview of the major steps involved in filing for bankruptcy under Chapter 13:
So, is a Chapter 13 bankruptcy right for you? To file for bankruptcy under Chapter 13, you must be unable to pay your debts currently, but you must also be earning enough that you will be able to make your payments under your repayment plan. If this isn’t feasible, you may want to consider a Chapter 7 bankruptcy or another alternative instead. If you think you may be eligible to file under Chapter 13—or if you don’t know and would like to find out—you can schedule a free, no-obligation consultation with New Jersey Chapter 13 bankruptcy lawyer Georgette Miller.
For individuals who are dealing with bills they can’t afford, there are lots of reasons to talk to a New Jersey Chapter 13 bankruptcy lawyer. Here are just some of the benefits of hiring a lawyer to help you file under Chapter 13:
If you are at risk of losing your home, filing for bankruptcy under Chapter 13 can protect your home from foreclosure. Your lawyer can include your mortgage in your repayment plan, and you can continue paying down your mortgage over time.
Filing for bankruptcy under Chapter 13 also prevents banks and other lenders from repossessing your property. This applies to cars, motorcycles, boats and other assets. The automatic stay triggered by your bankruptcy filing prevents repossession, and you can include these loans in your repayment plan.
The Chapter 13 automatic stay also prevents utility companies from shutting off services to your home. If you are behind on your utility bills, this can be crucial. With a more manageable monthly payment, you can get back in good standing without losing your utilities.
While the main purpose of filing under Chapter 13 is to develop a manageable repayment plan, you also have the option to eliminate certain debts during the bankruptcy process. For example, depending on your financial circumstances, New Jersey Chapter 13 bankruptcy lawyer Georgette Miller may be able to help you eliminate some (or all) of the following:
One of the nice features of having a Chapter 13 repayment plan is that it rolls your remaining debts into one reduced monthly payment. This simplifies the process of managing your finances—while also putting you on the road back to solid financial ground.
Filing for bankruptcy under Chapter 13 also protects you from wage garnishment. If you are behind on your taxes, it can protect you from having a tax lien placed on your property as well. Both of these can be difficult to undo once they happen, so if you have concerns, you should speak with Georgette Miller about filing your bankruptcy petition promptly.
Ultimately, the main benefit of filing for bankruptcy under Chapter 13 is to avoid major financial problems. While it is never too early to talk to a New Jersey Chapter 13 bankruptcy lawyer, waiting too long can lead to unnecessary issues. By securing bankruptcy protection under Chapter 13, you can protect your financial future, and you can avoid the severe financial strain that far too many people experience on a daily basis.
If you or a loved one are stressed over past due bills or are avoiding the telephone because of harassing creditor calls, contact Georgette Miller and Dilworth Paxson today to find out if Chapter 13 is right for you. Arrange for your initial consultation by calling or by filling out our contact form today.
In New Jersey, the filing fee for a Chapter 13 bankruptcy petition is currently $313 (as of 2022). If you cannot afford to pay the filing fee, Georgette Miller can help you apply to pay in installments or have the filing fee waived. Regarding legal fees, these vary from case to case. But, as your lawyer will be able to help maximize the benefits of your bankruptcy filing and negotiate with your creditors on your behalf, you can ultimately save money by putting an experienced lawyer on your side.
Yes, it is possible to negotiate a Chapter 13 repayment plan—and it is important that you do so. Negotiating is a key part of the process, and negotiating effectively can drastically reduce the amount you owe. To ensure that you resolve your Chapter 13 on the best terms possible, you will want to have an experienced New Jersey Chapter 13 bankruptcy lawyer negotiating on your behalf.
Since Chapter 13 repayment plans are based on debtors’ individual circumstances, there really isn’t a “typical” payment under Chapter 13. Monthly payments under Chapter 13 repayment plans can range anywhere from several hundred to several thousand dollars. Ultimately, however, what matters isn’t what other people pay but rather what you will have to pay (and what you can afford to pay consistently) over the next three to five years.
If you have a qualifying “hardship,” you can stop making payments under your Chapter 13 repayment plan before the plan officially ends. This is done by petitioning the bankruptcy court for a hardship discharge. Qualifying hardships are those that are beyond your control and that you cannot remedy—such as suffering a serious injury that prevents you from working. Losing your job or taking a pay cut generally does not qualify as a hardship under Chapter 13.
This chapter of the Bankruptcy Code provides for adjustment of debts of an individual with regular income. Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.
