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BANKRUPTCY LEARNING CENTER : Learn when should you file for bankruptcy.
Main : Chapter 7 : Chapter 13 : Stopping Creditors : Foreclosure : Life After Bankruptcy : Alternatives

FAQS about New Jersey bankruptcy court filing forms help payments chapter 7 & 13 by licensed attorney

File CHAPTER 13

If you have been named as a defendant in a foreclosure action, a petition filed under Chapter 13 of the United States Bankruptcy Code may be the answer if you can show 1) that you have more equity in a secured assets than can be protected with by Chapter 7 bankruptcy exemptions, and 2) that you have a regular source of income with sufficient funds to repay all, or part, of the debt you've already incurred. In other words, the prospective Chapter 13 debtor must earn more income each month than he or she spends on necessities such as food, clothing and rent.

Under Chapter 13 the debtor files a petition with schedules identifying assets, creditors, debts, unexpired leases, and other interests, along with a proposed plan (the "Plan") to repay all, or part, of existing debt. The Plan lists all creditors and the amount to be repaid each, which is calculated based largely upon the debtor's disposable income. Repayments are generally spread over the course of sixty (60) months, and commence immediately after filing your petition.

Before the Plan is confirmed, you will attend a very informal Meeting of Creditors (the "Meeting"), as required by Section 341 of the Bankruptcy Code. At the Meeting the Trustee will review your petition and Plan and ask any questions he or she may have, including those related to your income, assets, and creditors. Based upon the documents filed and any additional information obtained as a result of the Meeting, the Trustee will appear at a subsequently scheduled Confirmation Hearing before the United States Bankruptcy Court and either recommend to the Court that the proposed Plan is adequate and should be confirmed, and that all payments required to date have been made, or he or she will ask that the Plan be revised and presented to the Court again in approximately thirty (30) or sixty (60) days.

In addition to mortgage foreclosure, Chapter 13 can be used to cure arrearages on car loans, to pay back taxes, to stop interest from accruing on your state or federal tax debt, and to protect your interest in valuable non-exempt property from repossession. It is also useful to the debtor who has significant non-dischargeable debt such, as student loans Once you successfully complete the Plan, all remaining dischargeable debt will be released. The bankruptcy will remain on your credit report for seven (7) years; nonetheless, this will not put off many prospective creditors. Because you've completed the Chapter 13 Plan, you've demonstrated an ability to repay your debts over time. Overall, the negative impact of a Chapter 13 bankruptcy is much less than a Chapter 7 bankruptcy.

We understand that you have valuable assets into which you have already made significant investment. Whether it's the house of your dreams or a brand new car, the prospect of losing those assets is frightening. If you find yourself in danger of foreclosure or repossession, contact our bankruptcy attorney, Maureen K. Higgins, Esq., in Westfield, New Jersey, at (908) 232-9962, or in South Orange, New Jersey, at (973) 275-1222. We will move quickly and carefully to protect your interest and equity.

CHAPTER 13 BANKRUPTCY ARTICLES

Repaying Your Debts

The Process

How Long Chapter 13 Stays on Your Credit Report

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