Chapter 13 Bankruptcy Attorney in Hackensack, New Jersey
Dealing with debt issues and family finances can be devastating and sometime before this point should at least bring debtors to the point of considering filing for bankruptcy protection. Filing for Chapter 13 protection should not be a do-it-yourself matter. Getting professional bankruptcy and debt relief legal counsel can help protect your assets as well as avoid numerous substantive and procedural potential pitfalls in successfully getting your Ch. 13 Plan confirmed and completing your Ch. 13 case.
Attorney Marc G. Alster believes in the importance of protecting our clients’ financial rights and freedom. If you’re interested in filing for Chapter 13 bankruptcy, reach out to his law firm in Hackensack, New Jersey to schedule a consultation.
The Law Offices of Marc G. Alster serves clients throughout northern and central New Jersey counties, including Bergen, Passaic, Hudson, Essex, and Union, as well as New York counties such as Rockland, Westchester, Orange, and Putnam.
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Overview of Chapter 13 Bankruptcy
Chapter 13 bankruptcy, also known as “reorganization” bankruptcy, allows individuals with a regular income to restructure their debts and create a repayment plan to pay creditors over what is usually a three to five-year Ch. 13 Plan.
Unlike Chapter 7 bankruptcy (which may potentially involve liquidating non-exempt assets to pay off creditors), Chapter 13 allows debtors to keep all of their assets, both exempt and non-exempt, while repaying at least some percentage of their secured and/or unsecured debts. Debtors’ income and expenses are analyzed to determine an affordable payment plan, which is then submitted to the Court for approval.
Chapter 13 bankruptcy is often used by individuals with significant assets or income who do not qualify for Chapter 7 bankruptcy or who most often just want to protect their assets from being sold to pay off a secured creditor, whose secured debt is otherwise non-dischargeable. Chapter 13 can prevent home foreclosure or car repossession by allowing the debtor to catch up on missed payments through the payment plan.
Is Chapter 13 Bankruptcy a Good Debt Relief Option?
Every case is unique. Your debt relief path needs to reflect your specific situation, needs, and goals. Here are some situations where Chapter 13 bankruptcy might be a good option:
Chapter 13 bankruptcy can allow debtors to catch up on missed mortgage payments and avoid home foreclosure.
Chapter 13 bankruptcy can allow debtors to catch up on missed car payments and prevent car repossessions, and otherwise allow debtors to avoid their assets being sold off to pay off creditors.
Significant assets not protected by exemptions in a Chapter 7 bankruptcy may be eligible for Chapter 13 bankruptcy protection as long as debtors timely submit the required Ch. 13 Plan payments.
Chapter 13 bankruptcy is often a great option as long as debtors have sufficient income to make their regular, required, monthly payments pursuant to their Chapter 13 payment plan.
What Chapter 13 Bankruptcy Does & Does Not Do
Here are the main protections that Chapter 13 bankruptcy provides:
Filing for Chapter 13 bankruptcy protection, like a Ch. 7 bankruptcy case, triggers an automatic stay, which stops all collection actions by creditors, including foreclosures, repossessions, and wage garnishments.
Chapter 13 bankruptcy allows the debtor to create a repayment plan to pay off their debts over what is usually a three to five-year Plan (the "Chapter 13 Plan"). The Ch 13 Plan payment plan is based on the debtor’s income and expenses and is designed to be affordable and sustainable; it will require the debtor to repay at least some of their secured and/or unsecured debts.
Unlike Chapter 7 bankruptcy, which may require the debtor to sell non-exempt assets to pay off creditors (if they cannot be protected by the Bankruptcy Code's exemptions), Chapter 13 bankruptcy allows the debtor to keep their property and assets while repaying their debts over time.
If a debtor has a co-signer on a debt, such as a car loan or a mortgage, filing for Chapter 13 bankruptcy can protect the co-signer from being held liable for the debt.
In a successful Ch. 13 case, at the end of the Plan all/any remaining general unsecured debts, such as credit card debt, medical bills, etc. would normally be discharged, meaning the debtor is legally discharged from all/any obligation to pay those debts.
Conversely, Chapter 13 bankruptcy does not accomplish the following:
As in a Chapter 7 case, Ch. 13 bankruptcy does not discharge all types of debts. Certain tax debts and student loans are not necessarily dischargeable under Chapter 13 bankruptcy. Other debts including, but not limited to, criminal restitution, fines and penalties, Family Support Obligations, and debts that a creditor can prove were procured through fraud, may not be dischargeable.
Chapter 13 bankruptcy may not eliminate liens on property, such as a mortgage or car loan. Debtors may still be required to pay off liens to keep their property.
Chapter 13 bankruptcy will remain on the debtors' credit reports for up to 7 years, having a negative impact on their credit scores. However, debtors can rebuild their credit scores by making the required Chapter 13 Plan payments, and taking several other financially responsible actions, even before debtors receive their Chapter 13 Discharge Order.
Chapter 13 bankruptcy will not automatically resolve debtors' debt problems. Debtors must be committed to timely submitting their required monthly Ch. 13 Plan payments pursuant to their repayment plan for up to 60 months in order to procure their Discharge Order at the conclusion of their case.
Qualifying for Chapter 13
Not everyone automatically qualifies for Chapter 13 bankruptcy protection. To qualify, you will have to meet the following criteria:
You must be able to show that you have sufficient income to enable you to timely submit your regular, monthly Chapter 13 Plan payments pursuant to your Plan, and of course, your required Plan payments must be timely submitted.
If you’ve had your debts discharged through an earlier Ch 7 or Ch 13 Discharge Order, your ability to procure a Discharge Order in a new Ch. 13 case is restricted for 4 and 2 years, respectively.
Before filing for bankruptcy protection, you must complete a credit counseling course from an approved provider within 180 days of filing your case. Although quite simple, and in actuality perfunctory, your Certification of Completion must be attached to your petition. Counseling can be done online or over the phone.
After filing your Ch 13 bankruptcy petition, which of course must satisfy the filing requirements of the Bankruptcy Court, will be obligated to provide a variety of necessary paperwork to the Chapter 13 Trustee.
You must file for Chapter 13 bankruptcy in good faith and make a reasonable effort to repay your debts to the best of your ability.
The Filing Process for Chapter 13 Bankruptcy in New Jersey
To complete the bankruptcy petition/paperwork, the debtor must gather information about their income, expenses, debts, assets, and liabilities. The debtor must then file a bankruptcy petition and supporting documents with the Bankruptcy Court in New Jersey. Once the bankruptcy petition is filed, an automatic stay goes into effect, which serves to stop all collection actions by creditors as soon as they are notified of your filed bankruptcy case.
Within a few weeks of filing the bankruptcy petition, debtors will have to attend a meeting of creditors, where debtors will be questioned by the bankruptcy Trustee and any creditors who choose to attend the hearing ("the 341A hearing"). Creditors rarely attend 341A hearings.
The debtor must create a Chapter 13 payment Plan which provides details as to how they propose repaying some or all of their debts over what is usually a 3 to 5-year Plan. The Chapter 13 Plan must be submitted to the Bankruptcy Court for its approval. The Bankruptcy Court will hold a confirmation hearing where it will either approve or deny the debtor’s Chapter Plan.
Upon approval, debtors must timely submit their regular, monthly payments to the bankruptcy Trustee, who will distribute the funds to creditors according to the terms of the Plan. In the end, if the Plan is completed successfully, all of the debtor's dischargeable debts will be discharged, relieving the debtor of those debts.
Chapter 13 Bankruptcy Attorney Serving Hackensack, New Jersey
Don’t face bankruptcy alone. Get a trusted bankruptcy attorney on your side today. At the Law Offices of Marc G. Alster, it’s Attorney Alsters goal to help clients resolve their debt issues efficiently and effectively. Reach out today to speak with a professional debt relief attorney who can guide you every step of the way.