Monmouth County Chapter 13 Bankruptcy Law Firm
Guiding NJ clients through Chapter 13 bankruptcy
Chapter 13 bankruptcy is commonly known as debt reorganization. The advantage of Chapter 13 is that it will stabilize your financial situation, stop the debt collectors from calling, and give you a chance to pay only what you can afford, allowing you to keep your property. In this form of bankruptcy, the court will work with you to restructure your debt so you can pay your monthly obligations without going deeper and deeper into debt. According to federal guidelines, you are eligible to file Chapter 13 bankruptcy if you have unsecured debts less than $383,175 and/or secured debts less than $1,149,525. Speak to one of our experienced debt relief attorneys at Tomes & Hanratty, P.C. We will meet with you for a free, no obligation consultation to help determine if Chapter 13 might be right for your financial situation.
Secured debts and Chapter 13 bankruptcy
Mortgages and car loans are the most common types of secured debt. Secured debt means that if you don’t pay the loan, the creditor has the right to repossess the asset that was the basis for the loan. When you buy a home, you get the house. You agree to pay the purchase price on a monthly basis. You also agree (through a mortgage) that if you don’t make the payments the creditor can take your house. With a car, you agree to make the monthly payments. If you default, the car can be repossessed. Debtors who contemplate Chapter 13 are usually behind on their mortgages and car loans. Chapter 13 lets you pay the amount you’re behind (the arrears) over a 3 to 5-year period as long as you continue to make the monthly payments going forward.
Unsecured debts and Chapter 13 bankruptcy
Your credit cards, medical bills and many of your other debts are unsecured debt. Unsecured debt means there’s no personal property to back up the loan. Even your personal income taxes may qualify as unsecured debt. In Chapter 13, you will propose to pay a small percentage of the unsecured debt over a 3 to 5-year period. If you have money left over, that money is normally used to pay the unsecured debt. In Chapter 13 bankruptcy, you will be able to restructure existing debts such as your mortgage, allowing you to meet these obligations going forward and begin to rebuild credit right away. It is possible for you to keep your home and car under Chapter 13 bankruptcy protection. Once you successfully follow through on the terms of your repayment plan for a period of time, usually between three and five years, any remaining unsecured debt can be discharged by the court. When you get to that point, you will no longer be legally obligated to pay the unsecured debt.
Chapter 13 meeting of creditors
You will have to attend a meeting involving the bankruptcy trustee, you, your lawyer, and any creditors who wish to attend. This is also called the 341(a) meeting. During this meeting, the group will discuss your financial situation and the most practical way to satisfy the secured and unsecured debts you owe. The parties will discuss the repayment plan you have brought to the table and, of course, their plan. After the meeting of creditors, the court will decide on the plan that best suits the situation within 45 days and payment through the restructured debt payment plan will start soon after.
Contact our Freehold Chapter 13 bankruptcy law firm
Filing for Chapter 13 bankruptcy is a complicated and document-heavy process. You need the legal support of an experienced law firm to guide you through the process and protect your rights and future. If you need an effective law firm to assess your financial situation, help you decide between your options through bankruptcy, and represent your needs, contact Tomes & Hanratty, P.C. for a free consultation today.