Chapter 13 Bankruptcy
Under a chapter 13 bankruptcy, a debtor proposes a 3 to 5 year repayment plan to the creditors offering to pay off all or part of the debts from the debtor’s future income. You can use Chapter 13 to prevent a house foreclosure; make up missed car or mortgage payments; pay back taxes; stop interest from accruing on your tax debt (local, New Jersey state, or federal); keep valuable non-exempt property (see New Jersey exemptions); and more. If you can stick to the terms of your repayment agreement, all your remaining dischargeable debt (See below for Dischargeable Debts) will be released at the end of the plan (typically three to five years).
The amount to be repaid is determined by several factors including the debtor’s disposable income as is usually determined as part of the New Jersey Means Test. In addition, the total amount paid to creditors under the Chapter 13 plan must also be at least as much as creditors would have received if the debtor filed a Chapter 7 bankruptcy. To file Chapter 13 bankruptcy you must have a “regular source of income” and have some disposable income to apply towards your Chapter 13 payment plan.
Chapter 13 bankruptcy is generally used by debtors who want to keep secured assets, such as a home or car, when they have more equity in the secured assets than they can protect with their New Jersey bankruptcy exemptions. Chapter 13 bankruptcy is a reorganization whereas Chapter 7 bankruptcy is a liquidation.
A chapter 13 bankruptcy allows them to make up their overdue payments over time and to reinstate the original agreement. Where a debtor has valuable nonexempt property and wants to keep it, a chapter 13 may be a better option. However, for the vast majority of individuals who simply want to eliminate their heavy debt burden without paying any of it back, Chapter 7 provides the most attractive choice.
To set up a free consultation about bankruptcy, please call us at (201) 380-1050.
New Jersey Non-Dischargeable Debts
The following debts cannot be discharged in either Chapter 7 or Chapter 13 New Jersey bankruptcies. If you file for Chapter 7, you will still be responsible for repaying these debts after your discharge. If you file for Chapter 13, these debts will have to be paid in full in your plan. If they are not, the balance will remain at the end of your case. Remember that you will also have to continue to pay secured debts (such as a house or car payment) if you to intend to keep the secured property. [see statute 11 523(a)]
The following debts may be declared non-dischargeable by a bankruptcy judge in Chapter 7 if the creditor challenges your request to discharge them.
The amount to be repaid is determined by several factors including the debtor’s disposable income as is usually determined as part of the New Jersey Means Test. In addition, the total amount paid to creditors under the Chapter 13 plan must also be at least as much as creditors would have received if the debtor filed a Chapter 7 bankruptcy. To file Chapter 13 bankruptcy you must have a “regular source of income” and have some disposable income to apply towards your Chapter 13 payment plan.
Chapter 13 bankruptcy is generally used by debtors who want to keep secured assets, such as a home or car, when they have more equity in the secured assets than they can protect with their New Jersey bankruptcy exemptions. Chapter 13 bankruptcy is a reorganization whereas Chapter 7 bankruptcy is a liquidation.
A chapter 13 bankruptcy allows them to make up their overdue payments over time and to reinstate the original agreement. Where a debtor has valuable nonexempt property and wants to keep it, a chapter 13 may be a better option. However, for the vast majority of individuals who simply want to eliminate their heavy debt burden without paying any of it back, Chapter 7 provides the most attractive choice.
To set up a free consultation about bankruptcy, please call us at (201) 380-1050.
New Jersey Non-Dischargeable Debts
The following debts cannot be discharged in either Chapter 7 or Chapter 13 New Jersey bankruptcies. If you file for Chapter 7, you will still be responsible for repaying these debts after your discharge. If you file for Chapter 13, these debts will have to be paid in full in your plan. If they are not, the balance will remain at the end of your case. Remember that you will also have to continue to pay secured debts (such as a house or car payment) if you to intend to keep the secured property. [see statute 11 523(a)]
- Back child support, alimony obligations and other debts dedicated to family support.
- Debts for personal injury or death caused by driving while intoxicated.
- Student loans, unless it would be an undue hardship for you to repay.
- Fines and penalties for violating the law, including traffic tickets and criminal restitution.
- Recent income tax debts (within 3 years) and all other tax debts.
- Debts you forget to list in your bankruptcy papers, unless the creditor learns of your bankruptcy case.
The following debts may be declared non-dischargeable by a bankruptcy judge in Chapter 7 if the creditor challenges your request to discharge them.
- Debts you incurred on the basis of fraud.
- Credit purchases of $1,150 or more for luxury goods or services made within 60 days of filing.
- Loans or cash advances of $1,150 or more taken within 60 days of filing.
- Debts from willful or malicious injury to another person or another person’s property.
- Debts from embezzlement, larceny or breach of trust.
- Debts you owe under a divorce decree or settlement unless after bankruptcy you would still not be able to afford to pay them or the benefit you’d receive by the discharge outweighs any detriment to your ex-spouse (who would have to pay them if you discharge them in bankruptcy).