Chapter 13 Bankruptcy

Bankruptcy Piggy Bank

Chapter 13 bankruptcy can be viewed as a reorganization of debts and assets.  Debtors may wish to file for a Chapter 13 bankruptcy in an attempt to keep their assets, while at the same time pay off a portion of their debts pursuant to a 3 to 5 year negotiated plan.  Chapter 13 bankruptcy will also allow you to renegotiate interest rates, re-structure outstanding debt and allow you to catch up on missed or late payments.  The trustee appointed in your Chapter 13 case acts as the plan administrator who will accept your monthly payment and pay creditors according to the plan.

Examples of debts that can be discharged under Chapter 13 are personal (private) loans, credit card debt, and some income tax debts.  Some types of debt that cannot be discharged in a Chapter 13 bankruptcy include government-funded educational loans, debts for alimony and home mortgages.

The Automatic Stay

You may be concerned about the status of your assets if you were to ever file for bankruptcy, but rest assured, there is an automatic stay triggered upon filing a bankruptcy petition.  The automatic stay is a very important feature of Chapter 13 bankruptcy.  The automatic stay stops harassing phone calls and collection attempts and brings creditors to the table for negotiation.  This keeps your creditors at bay, while at the same time committing you to negotiated payments over a three to five year period of time.

The Process of a Chapter 13 Bankruptcy Filing

Chapter 13 bankruptcy is a way to catch up on missed or late payments, restructure debt with high interest rates and consolidate payments.  If you file for a Chapter 13 bankruptcy, you will be making payments directly to the trustee overseeing your case instead of making payments to individual creditors.  The trustee acts as the plan administrator simplifying your role in the process.  A bankruptcy judge must confirm a final Chapter 13 repayment plan, but payments to a proposed plan must be made within 30 days of filing a Chapter 13 petition.

The debtor works closely with the trustee to determine how much money per month can be paid to his or her creditors.  The trustee also works closely with creditors to come up with a fair compromise and a final plan is submitted to the court.  Chapter 13 bankruptcy filers will be able to keep their assets while paying off their debts over a 3 to 5 year plan that attempts to treat creditors fairly while providing the debtor with a fresh start.  A portion of debt may also be discharged.  Another beneficial aspect of Chapter 13 is that all contact with creditors stops because the trustee acts as the intermediary making the payments for the debtor.

Where Do I File My Chapter 13 Bankruptcy Petition?

The United States Bankruptcy Court, District of New Jersey, is where your NJ Chapter 13 bankruptcy petition would be filed.  The preferred method of filing is done through an Electronic Case Filing System (ECFS), where your attorney will upload the required documents after review and pay the required fee.  New Jersey’s Bankruptcy Court system includes three locations throughout the state, in Newark, Trenton and Camden.  A debtor’s residency determines where he or she will file the petition.

Call if You’re Considering Filing for Bankruptcy

If you have been struggling financially and need help, call an experienced bankruptcy attorney at Villani & DeLuca, P.C.  Of Counsel attorney Robert H. Johnson, Esq. has considerable experience as debtors’ counsel, handling all aspects of distressed business and individual bankruptcy cases.  He will take the time to help you come up with the best course of action for your financial woes.  Call (732) 965-3350 today to set up your free initial consultation.

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