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Hackensack Chapter 13 Bankruptcy Attorney

How a Teaneck Bankruptcy Lawyer Can Help You

This will cover substantive and procedural issues pertaining to individual debtor(s) filing for relief under Chapters 13 of the U.S. Bankruptcy Code and on the substantive issues that must be determined before deciding whether to file for relief under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. Chapter 13 is usually filed to save a home from foreclosure, a car from repossession or to otherwise safeguard a debtor(s) secured assets. Another article in this website focuses on substantive and procedural issues pertaining to Chapter 7 cases.

In the overwhelming majority of cases, Chapter 13 petitions are filed in order to give the debtor(s) time to catch up on arrearages owed on their mortgage(s). If you have been unable to keep up with monthly mortgage payments on your home, and are unable to quickly catch up and fear losing your home to foreclosure, filing for bankruptcy relief under Chapter 13 can assist you and give you much needed peace of mind. If you are able to resume making regular post-petition mortgage payments after your case is filed, you can have up to 60 months to catch up on past due mortgage arrears, if you can do this your home will be protected against all foreclosure efforts. Additionally, if you own a home which has more than one mortgage on it, and if the home is worth less than the amount owed on the first mortgage, a Chapter 13 filing will allow you to discontinue payments on the second or third mortgage loans by converting the second or third mortgage from a secured to a completely unsecured creditor. These wholly unsecured mortgage(s) liens against your home or other real property can then be removed when a Chapter 13 case is successfully completed. Clients with mortgage arrearages should also review the article on Mortgage Loan Modifications in this website.

By way of example, if debtor(s) are $10,000.00 in arrears on their mortgage, the debtor(s) will be able to pay the $10,000.00 to their mortgage lenders through a five year Chapter 13 plan. However, the regular pos-petition mortgage payments must be submitted to the mortgage company beginning on the first day of the month following the debtor(s) filing a Chapter 13 petition (in some case debtor(s) can make a payment of 60% of the amount of their pre-petition principal and interest payment to their mortgage lender). If debtor(s) fails to make their regular post-petition monthly mortgage payments to their mortgage lender after filing a Chapter 13 case, the mortgage company will likely file a Motion to Lift the Automatic Stay with the U.S. Bankruptcy Court. If a creditor is able to procure an Order Lifting the Automatic Stay, the creditor would then be able to either commence or continue prosecuting any legal action previously filed against the debtor(s), including a foreclosure action against the debtor(s) real property. The debtor(s) petition must indicate that the debtor(s) has sufficient disposable income to allow them to pay off their arrearages due to secured creditor(s) over a three to five year Chapter 13 Plan, in order for the debtor(s) Chapter 13 plan to be confirmed by The Bankruptcy Court. If debtor(s) fail to timely submit their Chapter 13 monthly plan payments to the Chapter 13 Trustee; the Trustee will file a Motion to Dismiss the debtor(s) Chapter 13 petition.

Searching for a lawyer for a Chapter 13 bankruptcy case in Hackensack, NJ?

A Chapter 13 plan will provide anywhere from a 0% to a 100% recovery to debtor(s) unsecured creditors, depending on whether the debtor(s) own non-exempt (unprotected) assets and whether there exists disposable monthly income in the debtor(s) household. This assumes debtor(s) satisfy the Bankruptcy Courts "Means Test" in New Jersey (New Jersey has one of the highest median family incomes in the United States). Only approximately 2 out of 100 debtors fail to satisfy the Means Test. If debtor(s) fail to satisfy the Means Test they must file a Chapter 13 petition, and have to provide for payments totaling a minimum of 25% of their total unsecured debt through a 3 to 5 year Chapter 13 Plan. All potential debtors/clients should consult The Law Offices of Marc G. Alster or another experienced bankruptcy attorney to determine whether they satisfy the Bankruptcy Codes Means Test requirements.

Another requirement for a Chapter 13 plan to be approved by the Bankruptcy Court is that the debtor(s) general unsecured creditors receive at least the same amount of money they would have received had the debtor(s) filed a Chapter 7 petition. For example, if debtor(s) have $10,000.00 in non-exempt (unprotected) assets and $50,000.00 of unsecured debt, the debtor(s) Chapter 13 plan must provide for unsecured creditors to receive at least $10,000.00 through the debtor(s) Chapter 13 plan. By way of another example, if all of the debtor(s) assets fall under the exemptions allotted by §522 of the U.S. Bankruptcy Code, and debtor(s) satisfy the Bankruptcy Codes "Means Test" and otherwise have no "disposable monthly income", the debtor(s) Chapter 13 plan does not have to provide for any recovery to unsecured creditors.

The initial bankruptcy process for a Chapter 13 case is essentially the same as that for a Chapter 7 case. In a Chapter 13 case, the Bankruptcy Court schedules a Confirmation Hearing to take place approximately two months after the 341(a) Hearing. The Confirmation Hearing is usually perfunctory and debtor(s) usually do not have to attend. The purpose of the hearing is for the Trustee to make sure that the Chapter 13 installment payment plan is fair to the debtor(s) creditors, and a feasible one which debtor(s) will be able to complete. Discrepancies, if any, between the amounts that debtor(s) propose to pay through their Chapter 13 Plan and the amounts creditors or the Chapter 13 Trustee believe the debtor(s) can or must pay are usually worked out amicably at or prior to the Confirmation Hearing.

Of course, the Discharge Order will not be issued by the Bankruptcy Court until after the completion of the Chapter 13 plan. It is important for debtors to realize that at the end of a Chapter 13 case the debtors will receive a discharge order from the bankruptcy court just like they would at the conclusion of a successful Chapter 7 case. While the Court's Chapter 13 Discharge may look a little different, unsecured debts, not found to be procured through fraud or the willful misconduct of debtor(s), are fully dischargeable in a Chapter 13 case just as they are in a Chapter 7 case. The debtor(s) may be able to pay off the entire amount of their Chapter 13 plan in full after the debtor(s) plan is confirmed by the US Bankruptcy Court. This is not always allowed and should be discussed with Mr. Alster if debtors believe they may be able to do this.

To learn more about how Chapter 13 works, call or contact our firm today. We offer free initial consultations, quality services at competitive rates and effective representation.

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

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The Law Office of Marc G. Alster - Hackensack Bankruptcy Attorney
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