Chapter 13 Bankruptcy Attorney in Somerville, New Jersey

Financial hardship is a common reality in today's world. Both individuals and businesses can experience stressful situations that can lead to unmanageable debt and an inability to meet financial obligations. In these instances, knowing your debt relief options is of vital importance. One option is filing for Chapter 13 bankruptcy, which is a legal debt relief strategy that can help repay existing debts. 

Filing for Chapter 13 does not mean you have failed financially. Instead, it provides an opportunity for you to take control of your financial situation and work towards a solution that will benefit both you and your creditors. If you are facing financial hardship in or around Somerville, NJ, the Law Offices of Herbert K. Ryder LLC can help determine whether Chapter 13 bankruptcy is right for you and help you take the first steps toward financial stability. 

What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy, also known as a "wage earner's plan," is a type of bankruptcy that allows individuals with regular income to restructure their debt under court protection and make payments over an extended period. A court-appointed trustee will work with you to create a repayment plan, which typically lasts between three to five years, depending on your specific financial situation. 

The main objective of Chapter 13 bankruptcy is to provide relief for individuals who have a steady income but are struggling to pay off their debts. This type of bankruptcy allows you to keep your property, such as your home and car, and negotiate more manageable payment plans with creditors, rather than liquidating your assets through Chapter 7 bankruptcy. 

Eligibility for Filing Chapter 13 Bankruptcy in New Jersey

To be eligible for Chapter 13 bankruptcy in New Jersey, an individual must meet specific criteria.  

• You must have a regular source of income that allows you to commit to a repayment plan.  

• Your total secured and unsecured debts must not exceed certain limits set by federal bankruptcy laws. Your total unsecured debts (e.g., credit cards, medical bills) cannot exceed $419,275 and your total secured debts cannot exceed $1,257,850 (e.g., home and car loans).  

• You must have filed both federal and state tax returns for the four tax years before your bankruptcy filing. 

These requirements can determine whether Chapter 13 bankruptcy could be a solution to your financial challenges. A knowledgeable bankruptcy attorney like Herbert K. Ryder can help clarify these qualifications and guide you through the eligibility assessment process. 

What Does Chapter 13 Bankruptcy Do?

Filing for Chapter 13 bankruptcy has several significant benefits: 

• It can discharge certain debts. After the successful completion of your repayment plan, Chapter 13 can eliminate or reduce certain debts, such as credit card debt, medical bills, and personal loans.  

• It stops collection efforts. The moment you file for Chapter 13, an automatic stay is put into place, halting all debt collection activities, including lawsuits, wage garnishments, and harassment from creditors. 

• It helps save your home from foreclosure. Chapter 13 allows you to stop foreclosure proceedings and make up overdue payments through your repayment plan. 

• It consolidates your debts. You make one monthly payment to the trustee, who then distributes funds to creditors, making your financial obligations more manageable.  

• It offers an opportunity to improve your credit score. By adhering to your repayment plan, you can demonstrate a responsible financial track record, which can improve your credit score. 

What Doesn't Chapter 13 Bankruptcy Do?

While Chapter 13 bankruptcy can provide much-needed relief, it also has its limitations: 

• It does not discharge all types of debt. Certain types of debt cannot be discharged through bankruptcy, such as child support, alimony, and most tax debts.  

• It does not eliminate property liens. If you have a lien on your property, such as a mortgage or car loan, Chapter 13 does not remove it. Instead, it restructures the payments. 

• It does not guarantee financial stability. Filing for Chapter 13 bankruptcy requires strict adherence to the repayment plan and can still be financially challenging for the duration of the repayment plan. 

It's crucial to consult with an experienced bankruptcy attorney to ensure you fully understand what Chapter 13 bankruptcy can and cannot do for your specific financial situation. 

When Is Chapter 13 Bankruptcy a Good Option?

Chapter 13 bankruptcy may be the right choice if you're facing foreclosure on your home, have secured debts you wish to reorganize, or have an income that is too high to qualify for Chapter 7. It offers a structured way to deal with debt while keeping your assets intact. Before filing for bankruptcy, consult with a seasoned bankruptcy attorney, such as Herbert K. Ryder. They have the necessary knowledge and experience to help you file a bankruptcy claim.  

Steps to File for Chapter 13 Bankruptcy in New Jersey

Filing for Chapter 13 bankruptcy in New Jersey involves a detailed process that requires meticulous preparation and attention to detail. The essential steps to file for Chapter 13 in the state of New Jersey are: 

1. Consult with a Bankruptcy Attorney: Given the complexity of bankruptcy laws, consult with a knowledgeable bankruptcy attorney who is familiar with New Jersey's specific laws and procedures. The attorney can advise you on whether Chapter 13 is the most suitable option for your situation. 

2. Complete Credit Counseling: You must complete a credit counseling course from an approved agency within 180 days before your filing date. This is a requirement under federal law that is also applicable to residents of New Jersey. 

3. Prepare Your Bankruptcy Petition and Documentation: With your attorney’s help, gather and prepare all the necessary documentation, including a detailed list of your current income, debts, assets, expenditures, and a proposed repayment plan. This also includes filling out the official bankruptcy forms. 

4. File the Bankruptcy Petition: Once your documents are prepared, file your bankruptcy petition with the New Jersey bankruptcy court. You will then be assigned a case number, and the automatic stay provision will go into effect, stopping most creditors from contacting you or proceeding with actions like foreclosure or repossession. 

5. Pay the Filing Fee: In New Jersey, there it costs $313 to file for Chapter 13. If you cannot afford to pay it all at once, you can make up to four installment payments. The first installment must be paid when you file the petition and must be 25% of the full filing fee. 

6. Attend the Meeting of Creditors: You, your attorney, and the bankruptcy trustee will meet, and you will be asked questions about your bankruptcy forms and financial situation. Creditors are also notified and allowed to attend, though they often do not.  

7. Begin Your Repayment Plan: After your repayment plan is confirmed by the court, you must start making payments to the assigned trustee, who will then distribute the payments to your creditors. 

8. Complete a Debtor Education Course: In addition to pre-bankruptcy credit counseling, you must complete a debtor education course after filing for bankruptcy but before your debts are discharged. 

9. Obtain Discharge: After completing your repayment plan, any remaining dischargeable debts will be erased. You will receive a discharge notice, marking the completion of your Chapter 13 bankruptcy process. 

While these steps provide a general overview, each bankruptcy case is unique. Specific steps or requirements may vary based on your individual circumstances and recent changes in laws. Always consult with an experienced bankruptcy attorney such as Herbert K. Ryder to ensure you follow the right process and comply with all the necessary legal requirements.