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Eligibility for Chapter 13 bankruptcy in New Jersey

A Chapter 13 bankruptcy allows those with a steady income to repay some or all of their debts over several years. Those who have an income below the state median level will repay their debts over a period of three years. However, it may be possible to extend that period if there is cause to do so.

Those with an income above this level will repay their debts over a five year period. Creditors may not start or continue any type of collection efforts during this time. Therefore, a debtor may be able to get his or her home out of foreclosure with a Chapter 13 bankruptcy, assuming mortgage payments are timely made. Overall, filing for this type of bankruptcy may be seen as a type of consolidation loan. This is because payment of certain secured debts may be spread out over three to five years, which may lower the monthly payment.

To be eligible for Chapter 13 bankruptcy, an individual or self-employed person must have unsecured debts of no more than $383,175. That individual’s secured debt may be no more than $1,149,525 at the time of filing. Additionally, the filer must also show proof that he or she has gone through an approved credit counseling session within 180 days prior to the filing.

Chapter 13 bankruptcy can be an effective way to save property and potentially protect cosigners from liability for certain debts. In addition, filing for bankruptcy will generally put an end to creditor collection calls or letters. Those who are considering bankruptcy may wish to talk to a bankruptcy attorney who can provide advice regarding its advantages and other eligibility requirements.

Source: United States Courts, “Individual Debt Adjustment“, September 30, 2014

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