Call: 856.997.2546Schedule Free Consultation
Menu ☰

5 Things to Know About Chapter 13 Bankruptcy

“I would personally like to thank Mr. Spiller for what he has done for me. He saved my house that my children & I have lived in for the last 22 years from foreclosure and I'm sure he would do for you as he has done for me.”

5 Things to Know About Chapter 13 Bankruptcy

Picture of a wallet with credit cards.It’s very easy to fall into debt. People start by charging one thing on credit…then another…then another…and before they know it, they’re neck-deep in overdue bills with more piling on. It can be a suffocating experience, and for some, the best option is to file bankruptcy.

Many people choose Chapter 13 over Chapter 7 bankruptcy in hopes that they can keep their house and other assets while paying off their debts. The bankruptcy process is complicated, but the following are a few things people should know about it (Based on this article by the Federal Courts):

1) People still need to make all mortgage payments

Unlike Chapter 7 bankruptcy, debtors can keep their houses and foreclosure processes will be stopped as soon as people file for Chapter 13. However, it’s still required to make mortgage payments on time during bankruptcy.

2) Creditors can’t contact debtors directly

Once a person is on a Chapter 13 plan, they’re assigned a trustee who acts as a middle-man between the debtor and their creditors. Instead of paying creditors directly, debtors pay their trustees who then pay the creditors on their behalf. The creditors are not allowed to contact the debtor directly, which spares the person from potential intimidation.

3) Credit counseling is required before filing for bankruptcy

Except for emergencies, people are required to receive approved credit counseling 180s before filing for Chapter 13 bankruptcy. Please contact a licensed attorney to learn more about this.

4) It requires discipline

Debtors need to repay their debts in 3-5 years depending on their monthly income. In order to do this, they need to adhere to a strict payment plan while living on a fixed budget and avoiding getting into additional debt.

5) It could still end in liquidation

If the debtor doesn’t adhere to their budget and payment plans, the Chapter 13 bankruptcy could be converted to a Chapter 7. Chapter 7 bankruptcy would mean liquidation, which means the debtor’s home and other assets could be sold.

This article should not be taken as legal advice. If you’re considering bankruptcy or another legal option, you need to consult an attorney for guidance. If you’re in New Jersey and seeking legal assistance, we can help you. Brenner Spiller & Archer, LLP is a New Jersey law firm that is dedicated to helping families find relief from the burden of debt and other financial woes. For more than 35 years, our bankruptcy lawyers have provided effective guidance on all debt relief matters to clients throughout Central and South Jersey.

Click here to schedule a free consultation with our trusted bankruptcy attorneys.

Request Your Free Consultation


Our Office Locations

 

MAIN OFFICE

175 Richey Avenue
Collingswood, NJ 08107

Phone: 856-997-2546

Fax: 856-858-4371

MAP & Directions

MT. HOLLY

33 Grant Street
Mt. Holly, NJ 08060

Phone: 609-303-5060

Fax: 856-858-4371

MAP & Directions

VINELAND

1063 E Landis Avenue
Vineland, NJ 08360

Phone: 856-406-2332

Fax: 856-858-4371

MAP & Directions

FREEHOLD

57 W. Main St.
Freehold, NJ 07728

Phone: 732-338-0659

Fax: 856-858-4371

MAP & Directions