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A Chapter 13 bankruptcy is the bankruptcy where you propose a re-payment plan. Now, the difference between a Chapter 13 and a Chapter 7 is in a Chapter 13 you propose a plan to repay some creditors. For example, you are behind on your mortgage but you want to keep your house, you can force the mortgage company to accept a repayment plan of that past due amount stretched over five years. For example, if the mortgage company is saying we need $6,000 today to bring your mortgage current, you can pay them an extra $100 a month for 60 months, which is a lot easier to do than come up with $6,000 right now, today.

A Chapter 7 doesn’t give you that right. The benefit of a Chapter 13 plan is it allows you to restructure some of your debt for things you want to hold on to that you might have fallen behind on. In return for that, you’ll send in some money every month to the court to pay part of those debts. How much that money is depends on what the debts are, what must be paid, and how much money you have to spare every month. The money you have to spare every month is determined by how much money comes into the house minus all of your necessary expenses, including food, your rent, your car, your medicine.

We actually sit down and we work out a budget and it helps you decide if this second car is really worth the grief of trying to squeeze out my monthly budget on $200 a month for food. All of these variables are really personal, so you really need to sit with your lawyer and work through it and have a realistic discussion about what can be done, what can’t be done, and what you need to live and what’s a luxury or what you can work around. Without going through that process, you don’t have a plan. If you don’t have a plan, your situation at the end is not going to be that much different than your situation at the beginning.

If you are in need of experienced legal counsel in New Jersey, please contact Tomes Law Firm, PC and we will be happy to assist you.