Chapter 13 bankruptcy is not an easy process to navigate if you don’t know what you’re doing. That is why a debtor should seek out an experienced bankruptcy attorney who does this for a living, and not just anybody who claims they can file bankruptcy for you.
We see many mistakes. Clients come to us all the time after seeing other attorneys who were not necessarily bankruptcy attorneys, and either harmed the debtor’s case or their case got dismissed because it was done incorrectly.
It is much easier if you have legal counsel who knows all the players, trustees, judges, creditors, and attorneys. We know the Bankruptcy Code, petition requirements, and what the questions mean. Call our New Jersey attorneys for an overview of Chapter 13 bankruptcy.
Once you file a bankruptcy petition, you receive the automatic stay, which prevents your creditors from trying to collect the debt you owe. That means they cannot send you statements, call you on the phone, sue you, continue with a lawsuit, or report negatively on your credit any longer.
You have that benefit for the entirety of your case. Once a debtor has completed the plan, they get the discharge order. This is basically a permanent injunction against any of the creditors whose debts did not get paid from ever trying to collect from them. In essence, it means the debts are wiped out. If a creditor later decided to come back for the money they did not get paid, we can sue them for violation of the discharge order.
It will include payments to the trustee; and what that payment addresses will depend on the facts of the case. It can pay back mortgage arrears over time, money owed to the IRS or the state of New Jersey, or real estate taxes. Your unsecured debt, such as credit cards, medical bills, or personal loans, may or may not have to be paid back. We would help you determine which debts need to be paid back, based on the facts of each case.
If you had secured debts, like a mortgage or a car, and wanted to keep the collateral (meaning you wanted to stay in your house or keep the vehicle) you would have to pay for them in some way. For example, let’s say you want to keep your house and are making your mortgage payments. Then something happens during the Chapter 13 plan that makes it hard or impossible to continue making those payments. The mortgage company cannot just file a foreclosure because you are not paying them.
The mortgage company would have to come to the bankruptcy court, file a motion for relief, and tell the judge they are not getting paid and want the right to get the leave from the bankruptcy and start the foreclosure again. You have the ability to oppose that motion, but if you are unable to make the payments in bankruptcy, the bank would ultimately get relief.
A plan of reorganization lasts anywhere from 36 to 60 months and is determined by the Means Test. If you are below median income when we do the Means Test calculation, then we can propose a plan for as little as 36 months. If you are above median income, then the Bankruptcy Code says the plan must be at least to be 60 months.
It may be the case where a debtor is below median income, but we want the plan to last 60 months because they have a lot of mortgage arrears to be paid back. The longer we can spread out those payments, the lower the monthly payment will be. Therefore, we may choose to make it a 60-month plan even though you would only need to be 36 months according to the Bankruptcy Code.
Finally, a confirmation order is sent once the court confirms your plan, which would be after the confirmation hearing. That is usually about three to four months after the case is filed.
There are numerous reasons why you will want a professional bankruptcy attorney managing your case. Call Gillman Capone to get a proper overview of Chapter 13 bankruptcy in New Jersey.
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