Chapter 13 Bankruptcy Attorneys in Middlesex County, New Jersey

The COVID-19 pandemic wreaked havoc on not only the physical and mental well-being of individuals worldwide but also the financial standing of many people. So far in New Jersey in 2021, there have been 2,640 Chapter 13 bankruptcy case filings out of a total of 11,560 bankruptcy filings for both consumers and businesses. Pandemic or not, consumers sometimes face debt that becomes overwhelming, causing them to turn to options they may have tried to avoid.

At Schwartz, Hanna, Olsen & Taus, P.C., we understand how difficult it is to consider bankruptcy as an option to achieve financial relief. Rather than fear bankruptcy, consider how the process may be the right choice in your situation. If bankruptcy is not the right path for you, our legal team can explore additional options to suit your goals. If you’re located in the New Jersey areas of Somerset, Morris, Passaic, Essex, and Bergen Counties, or anywhere else in the state, contact Schwartz, Hanna, Olsen & Taus, P.C. to speak with a qualified bankruptcy attorney.

How Does Chapter 13 Bankruptcy Work?

Chapter 13 bankruptcy is a type of repayment plan debt relief option that allows an individual to repay creditors with one monthly installment payment. The payment plan lasts three to five years, and by law, the plan cannot go beyond five years. An important function of Chapter 13 bankruptcy is halting creditor collection efforts during the pendency of the bankruptcy proceeding.

A person seeking debt relief through Chapter 13 bankruptcy will formulate a repayment plan that is affordable and satisfies creditors as much as possible. A trustee is appointed by the court to oversee the administration of the case.

The trustee is an impartial party who handles the collection of payments from the person who filed for bankruptcy and distributes those payments to creditors. The overall goal of a Chapter 13 bankruptcy is to wipe out as much debt as possible in a three-to-five-year timeframe while keeping many assets.

Can Anyone File for Chapter 13 Bankruptcy?

Most individuals, including the self-employed, as well as unincorporated businesses, can file for Chapter 13 bankruptcy in the following cases under federal law:

• The person or party has completed an approved credit counseling course within 180 days before filing for Chapter 13 bankruptcy;

• Total unsecured debt is less than $394,725; and

• Total secured debt is less than $1,184,200.

An individual is disqualified from filing for Chapter 13 bankruptcy if a prior bankruptcy petition was dismissed within the last 180 days for failure to appear before the court or comply with court orders. In other words, if an individual wants relief from the bankruptcy court and previously failed to comply with court orders, he or she must wait 180 days before filing for Chapter 13 bankruptcy.

When Is Chapter 13 Bankruptcy a Good Debt Relief Option?

Chapter 13 bankruptcy is a good debt relief option when a person wishes to keep his or her home, car, and other real estate and personal property that has value. Stopping foreclosure and vehicle repossession are critical to a person’s ability to have a place to live and a way to get around while climbing out of debt. Without the assistance of the bankruptcy court, creditors will continue to harass a person who is behind on bills.

Even one missed payment results in a phone call within days. Some creditors will work with customers, but when you are dealing with multiple creditors, the debt can be too overwhelming to handle alone. Chapter 13 bankruptcy is also a good option when a person does not qualify to file for Chapter 7 bankruptcy.

Earning an income above a certain level disqualifies many people from using Chapter 7 bankruptcy to liquidate all assets, concluding the bankruptcy proceeding in a matter of months. Although the stigma of having a Chapter 13 bankruptcy filing on record can be a cause for concern, bankruptcy often has a better outcome than debt settlement programs or being sued by creditors.

How Legal Counsel Can Help

Individuals can file for bankruptcy without the help of an attorney. However, doing so can be extremely difficult without a full understanding of a debtor’s legal rights and obligations. Working alongside a bankruptcy attorney will alleviate a lot of the stress involved in a Chapter 13 bankruptcy proceeding.