Chapter 13 Bankruptcy

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Chapter 13 bankruptcy will stop foreclosure.  When you file for Chapter 13 bankruptcy, you will not lose any property to the bankruptcy trustee as long as you can make the payments. If you cannot make your payments or arrange for loss mitigation you can still save your home from foreclosure.

If you have been turned down in the past for loan modification a chapter 13 can give you another shot at modification.  In New Jersey a chapter 13 bankruptcy allows you to pay 60% of your principal and interest and 100% of your escrow to your lender while in loss mitigation. Your arrears normally are paid by dividing your arrears by 60 so that if you completed your chapter 13 plan over a 5 year period the arrears would be paid by the end. A chapter 13 trustee is paid 10% of your payments to pay for their services. If you have questions talk to an NJ Foreclosure Defense attorney who understands bankruptcy.

Financial hardship can happen to anyone. Sometimes, it’s hard to face this type of circumstance alone. Luckily, there are solutions and professionals waiting to help when financial hardships become too burdensome to bear alone. If you find that your debt is not diminishing, but rather increasing with no end in sight, it may be time to consult with a Chapter 13 bankruptcy attorney in New Jersey.

If you do not qualify to file for Chapter 7 bankruptcy, a Chapter 13 bankruptcy could be the best option. Chapter 13 is often called debt reorganization or debt adjustment. Unlike a Chapter 7 bankruptcy that liquidates or eliminates debt, a Chapter 13 bankruptcy helps the debtor pay off their debt. In other words, Chapter 13 requires that a debtor incorporate a payment plan to pay all or parts of their obligations. To qualify for Chapter 13, a debtor must have current qualifying income.

It is wise to seek the legal advice of a professional Chapter 13 bankruptcy attorney in New Jersey. Filing a Chapter 13 alone is not recommended. Mistakes and incorrect paperwork can cause the court to delay or deny your case. Delaying or denying your case can result in more court costs and fees that could have been avoided if an attorney was enlisted to begin with. Moreover, the stress and headache of filing alone may not be worth the trouble of trying to save a little bit of money.

The office of Patel & Soltis, LLC, can help you with your Chapter 13 Bankruptcy, whether you’re located in Jersey City, NJ; Hackensack, NJ; Freehold, NJ; Newark, NJ; Brooklyn, NY; or New York City, NY.

Qualifying for Chapter 13 Bankruptcy

People who have a regular income, but are behind with their monthly payments should consider Chapter 13 bankruptcy. Since Chapter 13 allows debtors to repay all or part of their debt, they must have sufficient disposable income to do so. This option also allows debtors to eliminate unsecured debt. Eliminating unsecured debt frees up money that can be allocated to paying an individual or married couple’s mortgage. A trustee is appointed by the court to supervise, collect, and distribute payments.

To qualify for a Chapter 13 bankruptcy, the debtor has to meet the following:

  • Regular income.
  • Unsecured debts under $395,000. 
  • Secured debt under $1,184,200. 

Filing a Chapter 13 Bankruptcy

When a Chapter 13 is filed with the court, the debtor presents a payment plan that demonstrates how they will pay their past due and current debts. Along with all required bankruptcy paperwork, the debtor must disclose their source or sources of income. Aside from regular employment income, a debtor can also submit pension information, social security checks, unemployment, and amounts incurred from a sale on a property as proof of income.

Debtors planning to file a Chapter 13 must also be current on their tax filings. Proof of tax returns is required for the past four years. If a debtor is unable to provide proof of tax returns, their case will be dismissed. An experienced Chapter 13 bankruptcy attorney in New Jersey will ensure that all paperwork, documents, and proofs are filed correctly and entirely to avoid getting a case dismissed.

Once all required paperwork, proofs, and documents are filed with the court, a hearing will be scheduled to determine whether the proposed plan is acceptable. The timeframe to pay off debt under a Chapter 13 is three to five years. When all payments under the Chapter 13 bankruptcy has been satisfied, the case will be discharged.

The Appeal of Chapter 13

What makes Chapter 13 appealing is the fact that a debtor is able to keep their house and car throughout the bankruptcy. Since Chapter 13 stipulates that a debtor remit payment to his or her creditors, keeping a primary home and car is of no consequence.

Mortgage and car payments under Chapter 13 will depend on your specific situation. These payments are often equal to or more than your regular monthly payments. In cases where the debtor is behind or past due, payments will be more so that they catch up to a current status.

It is important to remember that all mortgage payments must be made on time under the stipulations of a Chapter 13. Late payments are not allowed. However, if your financial situation becomes worse, it is imperative to notify your Chapter 13 bankruptcy attorney in New Jersey and bankruptcy trustee right away. A modification of your payment plan may be warranted. If you do not inform your bankruptcy trustee and fail to keep the terms of your bankruptcy, the case could be dismissed.

The bankruptcy process can be challenging. But with the right legal representation, it is possible to obtain a financial solution that meets your needs.

Whether you’re in New Jersey or New York, Patel & Soltis, LLC serves the following areas: Jersey City, NJ; Hackensack, NJ; Freehold, NJ; Newark, NJ; Brooklyn, NY; or New York City, NY.

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If you regularly send money to a family member or pay support for alimony or child support it may be easier for you to qualify for bankruptcy.
If you are married and your spouse lives with you, your spouses income is included in the bankruptcy to determine if you qualify for a chapter 7 or if you have to make a payment plan under a chapter 13 bankruptcy, however your spouse DOES NOT have to file with you.
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