Chapter 13 Bankruptcy
STOP FORECLOSURE AND SAVE YOUR HOME!!!!
ELIMINATE OR GREATLY REDUCE CREDIT CARD DEBT AND MEDICAL BILLS!!!!!
A chapter 13 bankruptcy is also called a wage earner’s plan. It enables individuals with regular income to develop a plan to repay a portion of their debts. Your New Jersey Bankruptcy Lawyers will propose a repayment plan to make installment payments to creditors over three to five years.
If the debtor’s current monthly income is less than the applicable state median (determined by applying the “means test”, the plan will be for three years unless the court approves a longer period “for cause.” If the debtor’s current monthly income is greater than the applicable state median, the plan generally must be for five years. The plan can never last longer than five years. During this time creditors are strictly prohibited by law from starting or continuing collection efforts.
Under Chapter 13, you will be get a fresh start and relieve the stress that you are no doubt under. You will be given the chance to wipe out some bills and to catch up on the others. Your New Jersey Bankruptcy Lawyers will advise you as to which bills can be legally discharged.
Don’t feel ashamed!!! You are not alone. In the United States, approximately 1.5 million file for relief under the Bankruptcy Code EACH YEAR!!!!! For many people, this fresh start helps them toward a brighter financial future. There is indeed a light at the end of the tunnel. Sharp Bratton will get the collection agencies and other creditors off of your back!!!
FREQUENTLY ASKED QUESTIONS ABOUT CHAPTER 13 BANKRUPTCIES
- Question: Is there an advantage to filing Chapter 13 over filing a Chapter 7?
Answer: Filing under Chapter 13 has a number of advantages over filing for a chapter 7 liquidation. The most significant benefit is that individuals have the opportunity to save their home from foreclosure. Foreclosure proceedings may be stopped and the individual may be able to cure mortgage payment arrearages over time. After the filing, all future mortgage payments must be made on time. Other secured debts may also be part of the Chapter 13 schedule and the obligations may be extended over a period of time which in effect allows you to lower the payments. Third parties liable on a particular debt are also afforded special protection under the Bankruptcy Code. A debtor who has sought Chapter 13 protection will make payments pursuant to the plan to a Chapter 13 trustee who in turn distributes the payments to the creditors.
- Question: How do I know if I am a good candidate for a Chapter 13 Bankruptcy?
Answer: Your New Jersey Bankruptcy Law Firm, Rothamel Bratton will analyze your matter and determine if you are a good candidate. However, in general, the following types of situations illustrate the circumstances under which Chapter 13 will be considered:
- You are behind on mortgage payments. While under Chapter 13 protection, you can take up to five years to catch up on your payments. An added bonus is that in most cases, there is no interest or penalties assessed against you.
- Your home is in foreclosure. In most circumstances, the foreclosure proceedings can actually be stopped. You may decide that the home is no longer affordable. In that case, it is possible that you will get time to sell your home and hopefully benefit financially from the sale.
- Your home is listed for a Sheriff’s Sale. In most circumstances, the Sheriff’s Sale can be stopped. You may get up to five years to catch up on your back payments. If your home has already been sold at Sheriff’s Sale, contact your New Jersey Bankruptcy Attorney, Sharp Bratton, so that we can determine if it is possible to still save your home.
- Your car payments are in arrears. You may be entitled to take up to five years to catch up on your back car payments.
- The interest rate on your vehicle loan is exceedingly high. It is possible that you will be able to reduce the interest rate and take up to five years to pay off the balance of the loan
- Your car has been repossessed. If the car has not yet been sold at an auction, Rothamel Bratton will most likely be able to get your car back for you. You will then be able to pay off the balance of the loan over a three to five year period. We may be able to reduce the principal balance on the loan and to get you a lower interest rate.
- You have owned your vehicle for more than 910 days (2 ½ years) and it is worth significantly less than the outstanding balance on the loan. It is possible that your monthly vehicle payments can be reduced. The new monthly payment will be based upon the actual fair market value of your vehicle. Your New Jersey Bankruptcy Attorney will make this determination on your behalf.
- Your landlord is taking you to court to try to evict you because you owe back rent. In most cases, an eviction can be stopped if a Chapter 13 petition is filed prior to your court date. If a judgment for possession has already been granted to your landlord, we may still be able to help but the process would likely be very complicated and expensive. Don’t let yourself get to that point!
- You owe back taxes. In some cases, the tax liability can be satisfied through your bankruptcy plan over a period of three to five years. If successful, no interest or penalties will be paid by you.
- You owe fines imposed by a Court. In general, you will be able to include the fines as part of your plan. Some Municipal Court Judges forbid this method; however, your Rothamel Bratton Bankruptcy Lawyer will be able to advise you specifically.
- You have unsecured debts such as credit card bills – You may be able to get rid of unsecured debts. (An unsecured debt is a loan that you took out without posting collateral.) In many cases, a Chapter 13 Bankruptcy will allow you to greatly reduce if not completely wipe out your credit card bills, personal unsecured loans, medical bills, utility bills such as gas, electric, and telephone, surcharges on your driver’s license. Your New Jersey Bankruptcy Attorney at Rothamel Bratton may also be able to lift wage executions, stop freezes on your bank accounts, and get law
- You are behind in your utility bills and are receiving shut off notices. Under a Chapter 13, you can get rid of your past utility bills. A public utility such as Atlantic City Electric, Verizon, and Public Service Gas is required to continue to give you service in the future. While past due cell phone bills can be wiped out, the cell phone providers are not legally bound to continue to provide future cell phone time for you. Your option at that point is to try to get another provider to extend service to you. You will be able to maintain your same cell phone number.
- You have unpaid surcharges and that’s the only thing that is keeping you from getting your driver’s license. Often, our clients get back their driver’s license right away by filing for Chapter 13 Bankruptcy.
- You have income tax liability from more than three years old ago. As long as you filed the return more than three years ago, it is probably that the Bankruptcy Court will give you a complete discharge.
3. Question: Who is eligible for Chapter 13?
- Individuals (even if self-employed or operating an unincorporated business) areeligible for Chapter 13 provided that the unsecured debt is less than $336,900 and the secured debts are less than $1,010,650. Partnerships or corporations
- The Bankruptcy Code prohibits an individual from filing for Chapter 13 relief if,during the preceding 180 days, a prior bankruptcy was dismissed as a result of the debtor’s willful failure to appear before the court or comply with court orders or if a petition was dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens.
- An individual is eligible for a Chapter 13 discharge only after receiving creditcounseling from an approved credit counseling agency within 180 days before filing. If a debt management plan is developed during the course of the counseling, it must be filed with the court.
4. Question: What does the Chapter 13 process entail?
- First Step: We first work with you to prepare a petition which must be signed by you. It is a lengthy petition and must be filled out completely. We rely on you to provide us with the necessary information. Before it is filed, our bankruptcy paralegal will meet with you to ensure that all information is accurate and complete. While we are in the process of preparing the petition, we will give you the information that you need to complete your first credit counseling session which can be done by the internet or by telephone and generally takes between half an hour to an hour. We then file the petition electronically and the Court immediately assigns a case number. A repayment plan must be filed within 15 days after the petition is filed. (Unless there is an emergency, we prefer to file the plan along with the petition.) The plan will be submitted for court approval and it must provide for fixed payments to be made to the trustee on a regular basis. It is the trustee’s responsibility to distribute the funds to creditors in accordance with the terms of the plan. There are three types of claims: priority, secured and unsecured. Priority claims are those granted special status under the bankruptcy law. This would include most tax obligations as well as the costs of the bankruptcy proceeding. Secured claims are those for which the creditor has the right to take back certain property (i.e. collateral) if the debtor fails to pay the underlying debt. Unsecured claims are generally those for which the creditor has no special rights to collect against property owned by the debtor. The plan must generally pay priority claims in full. If the debtor wishes to hang on to the collateral (such as home or car) securing a particular claim, the plan must provide that the holder of the security interest be paid at least the value of the collateral and in most cases, the debt must be repaid in full. Your New Jersey bankruptcy attorney will advise you as to the treatment of secured debt. Unsecured claims are not required to be paid in full as long as the plan provides that the debtor will pay all projected “disposable income” over an “applicable commitment period” and as long as unsecured creditors receive at least as much under the plan as they would receive if the debtor’s assets were liquidated under chapter 7. Under chapter 13, “disposable income” is income (other than child support payments received by the debtor) less amounts reasonably necessary for the maintenance and support of the debtor or dependents and less charitable contributions up to 15 % of the debtor’s gross income. If the debtor operates a business, the definition of disposable income excludes those amounts which are necessary for ordinary operational expenses. The length of the “applicable commitment period” depends on the debtor’s current income. The applicable commitment period must be three years if current monthly income is less than the state median for a family of the same size – and five years if the current monthly income is greater than a family of the same size
- Second Step: The Bankruptcy Court will notify all of the creditors listed in yourpetition that a Bankruptcy case is pending. (You will receive a copy of the notice and will therefore know when the creditors have been notified. It is critical that you review the document carefully because it gives you information as to when and where you need to appear for the “Creditor’s meeting”. This meeting is usually scheduled to take place about 5 weeks after the filing of the bankruptcy petition.) If there is an emergent circumstance, your New Jersey Bankruptcy Attorney will notify the creditors immediately on your behalf. The following are examples of matters in which we may want to give personal notification: (1) Preventing a shut off notice for your utilities from taking place (or even getting the utilities turned back on); (2) Stopping a Sheriff’s sale or foreclosure proceeding; (3) Stopping a future vehicle repossession or getting back a vehicle that was already repossessed. (We will not be able to get the car back unless you provide us with proof of full coverage automobile insurance.); (4) Stopping an eviction proceeding if you are a renter; (5) Preventing the IRS from withholding your tax refund check; (5) Stopping wage attachments. (Sometimes we can get money returned to you that was taken from your salary within 90 days prior to your bankruptcy filing. (6) Working with you to get your driver’s license restated if it was suspended as the result of unpaid surcharges; (7) Removing the “freeze” from a bank account; (8) Getting your driver’s license back (if it was lost as the result of unpaid surcharges)IMPORTANT: Within 30 days after filing the bankruptcy petition, the debtor must begin making plan payments to the trustee – even if the plan has not yet been approved by the court. The debtor must continue making normal monthly payments to secured creditors (such as bank or finance company for a car or home) or to make lease payments as they come due. We recommend that you consider allowing your employer to pay the trustee directly through a deduction from your paycheck. This ensures that the payments will be made on a timely basis. Your bankruptcy lawyer will help you out with this process if you
- Third Step – You must appear at the Creditor’s meeting which is conducted by the Standing Chapter 13 Trustee. If you live in the Camden vicinage, the trustee is Isabel Balboa. If you live in the Trenton vicinage, Albert Russo serves as the trustee. A Rothamel Bratton bankruptcy attorney will attend the meeting with you. It is normally a very simple procedure that takes about 10 minutes. The purpose of the meeting is to ensure that all of the paper work has been completed in a proper manner, to determine if any changes have taken place since the filing of the petition and to make sure that you understand the Chapter 13 process and to emphasize that you must fulfill certain responsibilities such as making all of your trustee payments in a timely fashion. You will be placed under oath and the trustee and creditors (if any appear) will be able to ask you questions. The hearing is usually very smooth so long as there are no problems with the petition or plan – which is another reason to review the petition VERY CAREFULLY to make sure there are no errors or omissions. We will help you prepare for the meeting. The following are the types of questions that you will be required to answer: (1) Where are you employed? If you don’t work, what is your source of income? (2) Have you filed all of your income tax returns? Please note that you are required under law to be completely up to date in the filing of your tax returns or your Chapter 13 petition will be dismissed. (3) Do you owe any back taxes? (4) If you own your home, when was it purchased, how much did it cost, what is the current fair market value and how did you determine this? You should be prepared to bring a copy of your real estate tax assessment. (5) Who lives with you and do they share living expenses? If so, you will be required to provide proof of the other person’s income even though they are not filing for bankruptcy. (6) If you receive child support, you will need to provide documentation proving the amount of child support you receive. (7) If anyone helps you out with your bills, you will need a signed statement from that individual verifying the amount of financial assistance they provide to you on a regular basis. (8) Did you review the bankruptcy petition before it was filed? Did you meet with an attorney before signing the papers? Do you wish to modify the petition due to an error or omission? (There is an additional attorney and filing fee if additional creditors need to be added.) (9) Please provide your most recent pay stub or other proof of income. The pay stub should not include overtime pay unless you normally receive overtime. (10) Be prepared to explain why it was necessary for you to file bankruptcy. (11) Have you inherited or do you expect to inherit any property? (Please note that you are required to report any anticipated inheritance from someone who has already passed away or any inheritance you receive within 6 months of filing the bankruptcy petition.) (12) Do you have any safe deposit boxes? If so, what does it contain? (13) If you previously filed a Chapter 13 petition which was dismissed, you will need to convince the trustee as to why the case will work this time around. In other words, what has changed? (For example, has there been a change in your employment situation or expenses?) The trustee wants to ensure that you are not abusing the system by filing multiple bankruptcies. (14) 14. Are you current on your trustee payments? The trustee will have possession of the records and if you are behind in your obligation under the plan created by your Rothamel Bratton Bankruptcy Attorney, you will be advised that your case may be dismissed unless you get up to date in making your payments. Remember, if the case is dismissed, you lose the protection of the Bankruptcy Court and the creditors can come after you once again. (15) If you own a time share, you will be asked about the details of purchase and current financial obligations. (16) When will your current vehicle be paid off? This is relevant because once you have made your last monthly payment on your vehicle, you will have extra money. (17) Business owners are required to complete a detailed business questionnaire statement. Please provide us with detailed financial records including your most current profit and loss statement and proof that you have adequate insurance. It is critical that you let us know if you are running your own business, no matter the size.
IMPORTANT: Please be sure to bring your social security card and a government approved photo id.
FOURTH STEP – AFTER THE MEETING OF CREDITORS
You must continue making your regular monthly payments to the Chapter 13 trustee. Make your regularly scheduled payments to secured creditors if you plan to keep the home or car which acts as collateral. Don’t forget to notify us of any change in your financial circumstance. Also, if you wish to assume additional debt, make a major purchase or sell something of significant value, we must obtain permission from the trustee and the bankruptcy court. Just call us and we will take care of this.
FIFTH STEP – THE CONFIRMATION HEARING.
No later than 45 days after the meeting of creditors, the bankruptcy judge is required to hold a confirmation hearing and decide if the plan is feasible and meets the confirmation standards established in the Bankruptcy Code. Creditors will receive 25 days notice and are entitled to object to confirmation. The most frequent objections are that payments offered under the plan are less than the creditors would receive if the debtor’s assets were liquidated or that the debtor’s plan does not commit all of the debtor’s projected disposable income for the applicable commitment period (i.e. three to five years). We make every effort to construct the plan so that these objections do
You will most likely not be required to attend the confirmation hearing. Your New Jersey bankruptcy law firm Rothamel Bratton will advise you as to whether you must attend. At the hearing, the trustee reviews the case to determine the following: (a) Whether you are completely up to date in your payments to the trustee. (b) Whether any objections to your plan have been filed by creditors. (c) Whether the claims filed by creditors are consistent with the debt listed in your plan. (d) Whether the trustee believes it is appropriate to require a wage order for your monthly payments to the trustee. (This is likely to occur if you haven’t made your payments on time up to that point.) (e) Whether you have provided all documentation or information (if any) requested at the creditors’ meeting. (f) Whether you are financially able to make the plan payments It is possible that the trustee will recommend a different monthly payment amount than we proposed. We will keep you advised.
If the court confirms the plan (which normally occurs), the chapter 13 trustee will distribute funds received under the plan “as soon as is practical”. If the court declines to confirm the plan, we will prepare a modified plan designed to address any concerns. An alternative is that the case will be converted to a chapter 7. The court could also opt to dismiss the case.
If your circumstances change after the plan is confirmed, please contact us and we can seek a modification on your behalf. We may even be able to obtain a temporary suspension of plan payments. Circumstances that could warrant this are loss of employment, medical conditions or a similar situation. The same holds true if you are unable to make mortgage or car payments outside of the plan.
If you don’t make the payments, the trustee may write you a letter giving you the opportunity to catch up. If you don’t, he or she will most likely file a motion with the court to dismiss your case. If this happens, contact us immediately so that we can try to help you out. If your case is dismissed, you will lose bankruptcy court protection and your creditors will once again begin contacting you.
Once you have completed your payments under the bankruptcy plan (at the end of the three to five year period), you are entitled to a discharge so long as you (1) certify (if applicable) that all domestic support obligations that came due prior to making such certification have been made (2) have not received a discharge in a prior case filed within a certain time frame (two years for prior chapter 13 case, four years for prior chapter 7, 11, and 12 cases); and (3) have completed the required credit counseling. (We will give you more information on this aspect.)
The discharge release you from all debts provided for by the plan or disallowed with limited exceptions. Creditors provided for in full or in part under the chapter 13 plan may no longer initiate or continue any legal or other action against you to collect the discharge obligations. (Certain types of debt are not dischargeable. Your New Jersey Bankruptcy attorneys will inform you if any of your debts are non dischargeable)
- Question: How much does it cost to file a Chapter 13?
Answer: The Bankruptcy Court requires a filing fee of $274. There are also two credit counseling sessions that you must do to file for Bankruptcy and be entitled to discharge of your debts. Each session costs approximately $50. We obtain an up to date credit report to ensure that all of your debts are included at a fee of $35. The attorneys fee is $3500 in most cases. We require an up front payment of $750. The rest is paid to us through your bankruptcy plan. The total up front cost to you is $1160.00.