Chapter 13 Bankruptcy in New Jersey
Chapter 13 bankruptcy can give eligible individuals time to repay debt through a court-approved plan while keeping property and working toward a discharge of qualifying debts. It may be worth considering if you have regular income but have fallen behind on a mortgage, face collection pressure or need an alternative to Chapter 7.
Rudikh & Associates helps New Jersey residents evaluate bankruptcy options. Attorney Yan Rudikh handles Chapter 7 and Chapter 13 matters. Contact our Old Bridge office to discuss your income, property and debts in a free initial consultation.
How Chapter 13 works
A Chapter 13 case generally involves a repayment plan lasting three to five years. You make required plan payments to a trustee, who distributes funds according to the approved plan. The amount is based on legal requirements and your financial circumstances; it is not simply the total of your debts divided by the number of months.
Some debts may be paid in full, while eligible unsecured debts may receive less than the full balance. A discharge generally follows successful completion of the plan and other requirements. Certain obligations can survive the case, and a discharge does not automatically remove every lien.
Who may qualify
Chapter 13 is available to eligible individuals with regular income, including some people who are self-employed. Corporations and partnerships cannot file under this chapter. Eligibility also depends on statutory debt limits, prior bankruptcy history and other requirements.
The court must be satisfied that the proposed payments are feasible. A household can have steady income and still lack enough available money for a particular plan. Reviewing actual expenses, mortgage obligations and income changes before filing helps identify that problem early.
Most individuals must complete approved credit counseling within 180 days before filing, subject to limited exceptions. A separate debtor education course is generally required after filing to obtain a discharge.
Catching up on mortgage payments
Chapter 13 may allow you to cure qualifying mortgage arrears over time while maintaining the regular payments that come due after filing. This can be useful when a temporary setback caused missed payments but your current income can support the home going forward.
Timing matters. A foreclosure sale, earlier bankruptcy cases and the type of mortgage can affect available relief. Filing is not a guarantee that you will keep the property. If you have a sale notice, tell the firm the scheduled date when you call and provide the notice promptly. Read more about foreclosure and bankruptcy in New Jersey.
What happens to collection activity
Filing usually triggers an automatic stay that temporarily stops many collection actions, including many debt collection lawsuits and garnishments. Exceptions apply, and prior filings can limit whether a stay arises or how long it lasts. Creditors may also ask the court for permission to proceed.
The stay creates a legal pause; it does not itself erase debt. You still need to comply with your plan and other obligations. A consultation alone does not put a stay in place.
What your monthly payment may include
The plan may need to cover mortgage arrears, certain tax or support claims, vehicle debt, approved attorney fees and trustee fees. Your income and the value of nonexempt property can also affect what unsecured creditors must receive. Some ongoing expenses may remain payable directly outside the trustee payment.
Our guide to Chapter 13 payment plans explains these components and why a payment estimate requires a full financial review.
The steps from consultation to completion
- Gather income records, account statements, debt notices and information about everything you own.
- Review Chapter 13 alongside Chapter 7 bankruptcy and any practical nonbankruptcy options.
- Complete required counseling and prepare accurate filing documents and a proposed plan.
- Begin payments by the applicable deadline. Payments ordinarily start before plan confirmation.
- Attend the 341 meeting of creditors and address trustee requests or objections.
- Obtain confirmation, maintain required payments and complete the remaining discharge requirements.
Common Chapter 13 questions
Can I file if I earn too much for Chapter 7? Chapter 13 may be an option, but income alone does not establish eligibility. Your debts, prior cases and ability to fund a lawful plan still matter.
Will I repay every credit card in full? Not necessarily. Treatment depends on the plan requirements, available income, property and allowed claims. No particular repayment percentage can be promised before reviewing the case.
What if my income changes? Tell your attorney promptly. A modification or another option may be available, but you should not reduce or stop payments without advice and any required court approval.
Discuss Chapter 13 with Rudikh and Associates
Call 732-659-6961 or request a free initial consultation. Our primary office is at 14 Woodward Drive, Old Bridge, NJ 08857. Bring any foreclosure or collection deadline to our attention at the start of the conversation.