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Bankruptcy Lawyer Explains the Basics of Filing Chapter 13 in New Jersey

New Jersey Chapter 13 Bankruptcy is referred to as debt reorganization. A chapter 13 debtor must create a plan, which requires monthly payments to a trustee over a period of 36 to 60 months. The amount of the monthly payment and the creditors that must receive funds are based on a number of criteria- including: income, expenses, assets, liabilities, etc. The plan must include how each creditor is to be treated or paid. A chapter 13 will save an individual’s house from foreclosure. If a debtor is involved with a mortgage foreclosure action, the bankruptcy laws require the debtor to pay the pre-filing mortgage arrears to the trustee through the plan payments. In addition to the trustee payments, the debtor is required to make their regular monthly mortgage payments.

It is important to note that although the Chapter 13 bankruptcy plan in New Jersey must specify how each creditor is to be treated (paid), the debtor may not be required to make payments to certain creditors, such as unsecured creditors, (i.e. credit cards). Unlike unsecured debt, the debtor must pay priority debt through the bankruptcy plan. Priority debt in bankruptcy can be an income liability or child support arrears. The bankruptcy trustee monitors the debtors’ monthly payments to ensure that payments are made, each month, on a timely basis.

Chapter 13 bankruptcy process in New Jersey is very flexible. The debtor is permitted to sell their house and modify their mortgage loan through the plan. Also, an individual is permitted to surrender their automobile and possibly discharge the loan balance. Furthermore, the debtor may request to modify their bankruptcy plan for any legal reason, that is approved by the trustee, who is administering the case.

To access more helpful information regarding whether filing for Chapter 13 bankruptcy in New Jersey is the best solution for you, please call New Jersey Chapter 13 bankruptcy attorney Robert Manchel at 866-503-5655 or visit

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