Chapter 13 Bankruptcy

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Chapter 13 allows the person filing to keep property while paying debts over three to five years.

Filing a chapter 13 bankruptcy helps people keep their property like their home and car by making payments over time.  Filing a chapter 13 bankruptcy in NJ allows people to reorganize their debts and payments.  Chapter 13 is used by individuals and married couples but not businesses.

Why would someone file a Chapter 13 instead of a Chapter 7 bankruptcy?

Chapter 13 offers you the opportunity to save your home from foreclosure in NJ. If you are behind on your mortgage payments and want to prevent foreclosure both a Chapter 13 and Chapter 7 will stop a NJ sheriff sale, but the Chapter 13 lets you work on a plan to pay for your home and keep it. Past due mortgages payments and other fees can be spread over a  time and the foreclosure action in court is stopped. However, it is possible for your bank to request your home to be sold if they do not agree with your proposed payment plan.

Chapter 13 bankruptcy is used by people who want to keep property that they are making payments on like their home and car.  When you have more equity in the secured assets than you can protect with your New Jersey Bankruptcy Exemptions or Federal Bankruptcy Exemptions. Chapter 13 bankruptcy is a reorganization of your debts whereas Chapter 7 bankruptcy is a liquidation of your debts. Chapter 13 acts like a consolidation loan under which you would make payments to a NJ chapter 13 trustee who then distributes your money from your payment to the trustee to your creditors. Your creditors will not be allowed to contact you directly while under chapter 13 protection, which can be awkward if you include friends or family members in your bankruptcy plan.

Once you file, you must make all of your mortgage payments that come due during the chapter 13 plan on time. If you fall behind on payments while in bankruptcy, you may additional problems, but they should be able to be fixed if you can work out the past due payments.

Talking with a NJ Bankruptcy Attorney will allow you to get expert advice on which version of bankruptcy is best for you.


Are you eligible to file for Chapter 13 Bankruptcy in NJ?

Even if you are self-employed or operating a business, you can be eligible to file a chapter 13 Bankruptcy.  As long as your unsecured debts are less than $383,175 and secured debts are less than $1,149,525. 11 U.S.C. § 109(e). These amounts are adjusted on occasion, so if you are close to either of these numbers, we will check for possible updates prior to filing.

If in the preceding 180 days, you has a bankruptcy petition dismissed due to the your “willful failure to appear before the court” or “comply with orders of the court” or “was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens” you are not allowed to file. 11 U.S.C. §§ 109(g), 362(d-e).

You are also required to take a credit counseling course at least 180 days prior to filing bankruptcy.  This can be waived in emergency situations, however, the class can easily be completed in an hour or two.

If you additional questions about filing a Chapter 13 Bankruptcy.  Contact us at (844) 5 – DEFENSE – (973) 200-1111 or email us at


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We understand that nothing is more important than the emotional, financial and spiritual health of your family, through its many transitions. We are here to help you. The mission of PCB Law offices is to provide our clients with the best legal advice possible.

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