For A Chapter 7
In a chapter 7 bankruptcy case, the entire process lasts about 5 months from the filing until discharge. Typically, it is unusual for a trustee to sell a debtor’s property. Therefore, generally, the debtor may keep their real estate and personal property through the bankruptcy procedure. The only issue is whether or not the secured creditor will take the property, such as a mortgage company or auto finance company.
A chapter 7 discharge, eliminates the creditor’s right to pursue the debtor for money damages. However, if a debtor is in default with their mortgage, the mortgage company may file a foreclosure action to take the house. If the debtor is in arrears with their auto payment, the finance company may repossess the auto.
A chapter 7 debtor may change their initial intention of surrendering their real estate to keeping their real estate and vise verse. However, the debtor must resolve the default issues directly with the mortgage company. In other words, if the debtor is in default, he may resolve the mortgage issues by curing the arrears or by working out a loan modification. The matters may be resolved after the debtor receives his bankruptcy discharge. However, when the house is sold at sheriff’s sale, the debtor’s right to resolve the mortgage issues are terminated, as the mortgage company takes ownership of the property.
Typically, a debtor may change his intention regarding his decision as to whether to surrender or keep the vehicle. In most situations, if the debtor is current with the finance payments, he may keep the auto. If the debtor is not current, the finance company will repossess the auto. This information does not consider reaffirmation agreements.
Chapter 13 debtor
A chapter 13 debtor is required to make monthly payments to a trustee for a period of 36 to 60 months. The plan period must be for no less than 36 months, unless the debtor is paying all creditors 100% in less time. If the household income of the debtor is in excess of the average income of a household of that size in New Jersey, some judges will require that you make monthly payments for a period of 60 months. The monthly payments must be no less than all of the debtor’s disposable income.
Some debt, such as certain taxes and child support arrears, must be paid through the monthly trustee payments, under any and all circumstances. However, there are other creditors who are paid voluntarily, through the plan, such as mortgage and auto arrears. A debtor may save their house or auto by paying the arrears through the monthly payments. A debtor may change their mind at any time during the chapter 13 plan and surrender their house or auto, due to loss of income, or other circumstances.
If the debtor changes his mind, he may file a modified plan, which will likely result in modified monthly payments. However, as said, the monthly payments, must continue to be no less than the debtors’ monthly disposable income. If the debtor no longer has monthly disposable income, the debtor may possibly qualify and convert to a chapter 7 bankruptcy.
Please call Robert Manchel, a NJ bankruptcy expert, at 1 (866) 503-5655, to discuss your bankruptcy protection options.