Chapter 13 Bankruptcy

What can I accomplish with a Chapter 13 bankruptcy filing?
A chapter 13 requires monthly trustee payments. The payments must be made for at least 36 months and no more than 60 months. The amount of the payments must be no less than the debtor’s monthly disposable income.
Why would a person file a chapter 13 and not a chapter 7?
If a person does not meet the criteria for a chapter 7 and has too much monthly disposable income, he must pay back a portion of the debt. Also, an individual may wish to save a house or auto from repossession / foreclosure, which requires a monthly payment to a trustee. Additionally, a person may wish to pay a creditor through a chapter 13 plan, that is not dischargeable in a chapter 7. Furthermore, there is certain debt that may be dischargeable in a chapter 13 that is not dischargeable in a chapter 7, such as certain type of marital debt. Similar to a chapter 7, immediately upon the filing, no creditor may pursue the debtor for the collection of any debt.
A chapter 7 does not prevent repossession of an auto or foreclosure of a house if the person is behind with their monthly payments. A chapter 13 can prevent a repossession and a foreclosure action, by paying back the payment arrears, through the monthly trustee payments, while continuing to make regular monthly payments on the auto and/or house. When the chapter 13 is completed, the pre filing arrears should be cured and the property is no longer in danger of loss.
Also, in New Jersey, a chapter 13 bankruptcy can permanently strip away a second mortgage from the debtor’s house. This is called avoiding the lien. A debtor can avoid the second mortgage if the present market value of the house is less than the mortgage payoff of the first mortgage. A New Jersey chapter 7 case does not permit second mortgage lien avoidance.
Based on various factors, a person may be able to pay their entire auto balance, plus a fair rate of interest, through a bankruptcy plan. This can reduce your monthly auto payment by lengthening the years of the financing. Also, under certain circumstances a person can keep their auto by paying the value of the auto, plus a fair rate of interest, through the plan. This will allow a person to keep the auto and reduce the amount that is paid.
In addition to the above, a person may be able to eliminate all or a portion of their unsecured debt (ie. credit card debt), depending on their monthly disposable income and asset values.
The Law Offices of Robert Manchel limits their practice to bankruptcy law. Please contact New Jersey bankruptcy attorney Robert Manchel at 1 (866) 503-5655, for questions and more bankruptcy information.

A chapter 13 debtor (person filing for bankruptcy) at some point may no longer be able to make their monthly trustee payments due to various factors, such as a reduction in income, higher expenses, etc.
The bankruptcy code permits a debtor to file a modified plan based on a number of circumstances. However, the amount of the monthly payment may not be permitted to change.
A portion of the monthly trustee payment may include funds that will be paid to various creditors, such as payments to the mortgage company for pre-filing mortgage arrears. A portion of the trustee payment may be paid to an auto finance company for auto arrears. There may also be disbursements to unsecured creditors, (ie. credit card companies), that are paid pro-rata.
If a debtor is no longer able to continue paying the same amount to the trustee, typically he will not be able to reduce the payment by paying less to the mortgage company if he wishes to keep the house. He may be able to eliminate the mortgage payment if he decides to surrender the house. This same analysis applies to payments to the finance company for a vehicle.
A debtor may possibly reduce their monthly payment by extending the number of months of the plan to a 60 month plan, which will allow for a reduced monthly payment by paying the funds over a longer time period. Please note that this may not be possible.
If no trustee funds are to be paid to unsecured creditors, under the original plan, then it is likely that no payment will be required to be paid to unsecured creditors under the modified plan in the event that the debtor’s income is reduced. It is also possible to modify the plan to reduce or eliminate the amount of funds that will be paid to the unsecured creditors under the modified plan. However, if the amount of funds paid to the unsecured creditors is a result of substantial assets at the time of the bankruptcy filing, a modified plan will not permit the debtor to reduce the amount that is required to be paid under the original plan.
Depending on the judge and the trustee administering the case, a plan may not be modified to less than a 60 month plan if the debtor’s household’s income was more than the average NJ household’s income of the same number at the time of the initial bankruptcy filing.
Robert Manchel,  NJ bankruptcy lawyer, may be contacted at (866) 503-5655 to answer your bankruptcy questions.

The court will not permit a debtor to continue with a chapter 13 bankruptcy case unless the debtor provides sufficient proof of income to the trustee that he is able to make the required monthly payments. If two married individuals are residing together, both spouses must include their income and expenses on the petition, no matter if one or both of the spouses have filed for bankruptcy. Typically, any additional household members must also include their income and expenses on the petition.
If a debtor does not have sufficient household income to make the monthly payment to the trustee, the trustee will permit a non-household member (ie. relative, friend) to contribute to the debtor’s monthly income. The proof that is required depends on the trustee. In general, the trustees require that the contributor sign a letter or formal legal certification reflecting their intent to contribute a certain sum to the debtor for a certain time period. Additionally, depending on the trustee, the contributor must provide a pay stub or other proof of income reflecting their ability to pay.
On occasion, the contributor will refuse to provide the above documents, as they are worried that they will be legally liable to the trustee for the monthly payment. However, in fact, the contributor will not be held liable to the trustee, court, or any other entity, for any funds, whatsoever. The trustee and court understand that the contributor only states that they intend to make the payment.
Robert Manchel is an experienced NJ bankruptcy lawyer who will provide expert bankruptcy advice. Give him a call at (866) 503-5655.

Sometimes a debtor may need to amend a schedule or a portion of their petition due to an inadvertent mistake or change in their circumstances. A debtor may wish to modify their petition to correct a mistake, such as changing the value of an asset or including an asset. Under the chapter 13 bankruptcy rules, a debtor is permitted to file an amendment as a right at any time prior to the closing of the case. The amendment must be reviewed, signed, and certified by the debtor as to its accuracy and filed with the court. Notice of the amendment must be sent to the trustee and all impacted creditors.
Typically, a debtor is permitted to modify their plan, which reflects the amount of monthly payments and how their debts are to be reorganized.
The petition may be modified to add a creditor. The court charges $30 to add a creditor. The debtor is required to provide specific notice to the added creditor regarding certain information about the case. Depending on the circumstances, adding a creditor to a chapter 13 case may not permit the debtor to discharge such debt.
Robert Manchel, an experienced and knowledgeable New Jersey bankruptcy lawyer, may be contacted at (866) 503-5655 to discuss your individual circumstances.

There are three chapter 13 trustees in the State of New Jersey.
Marie Greenberg is the chapter 13 trustee for the Newark vicinity.
Albert Russo is the chapter trustee for the Trenton vicinity.
Isabel Balboa is the chapter 13 trustee for the Camden vicinity.
All trustees require that all payments be made by certified funds, which means a money order, bank check, etc. The trustee will not accept personal checks. Every payment must indicate the debtor’s name and case number. Also, all payments must be sent to the trustee’s respective PO Box, located in Tennessee.
At the time of this blog, only Albert Russo accepts online payments. Mr. Russo’s website provides an explanation of the process and a link to the registration site. The online payment process will not automatically withdraw the payment from the debtor’s bank account and requires the debtor to personally enter the payment request for each and every payment. Upon entry of the withdraw request, the funds will immediately be removed from the account and deposited into the trustee’s account within 3 business days. The present processing fee for each payment is $1.50. If one payment is rejected for insufficient funds, the debtor will be permanently prohibited from future use of the system.
If you have any questions regarding the chapter 13 bankruptcy process, you may contact the office of Robert Manchel, NJ bankruptcy lawyer, at (866) 503-5655 to discuss your questions.

Typically, a chapter 7 bankruptcy is designed for a person that wishes to discharge (eliminate) certain debt, such as unsecured debt (credit card debt). A person may also discharge secured debt. However, if a person wants to keep the property that is connected with the secured debt, such as a house or auto, the person must keep current with the secured debt payments. If a person is behind with their secured debt payments, such as a mortgage or auto financing, the chapter 7 will not help save them from foreclosure or repossession.
If the debtor meets the criteria of a chapter 7, the debtor is entitled to a discharge. However, a chapter 7 discharge does not discharge certain types of debt. The entire process takes about five months from the filing date to the entry of discharge. In the unusual situation that a trustee sells a debtor’s asset, the asset may be sold at any time after the discharge. No court payments are required to be made in a chapter 7 case.
Typically, a chapter 13 requires a monthly payment to a bankruptcy trustee. The amount of the monthly payment and the creditors that are paid, depends on numerous factors.
A person may file for chapter 13 for a number of reasons. The first reason may be based on the debtors’ inability to meet the criteria of a chapter 7, in that he has substantial monthly disposable income. Under this scenario, the debtor is not able to eliminate all unsecured debt or other type of debt, and must pay a portion of the debt to such creditors, over a certain time period.
A person may wish to file a chapter 13 to help save an auto from repossession or a house from foreclosure. Under this scenario, the debtor, in some fashion, must cure the mortgage and/or auto finance arrears over the life of the chapter 13 plan, through the monthly trustee payments.
A person may wish to file a chapter 13 for the purpose of discharging a type of debt that is not dischargeable in a chapter 7, such as certain debt that is due to an ex spouse. Also, certain debt may be reduced in a chapter 13, that cannot be reduced in a chapter 7.
Similar to a chapter 7, certain debt is not dischargeable in a chapter 13, even though the entire bankruptcy plan is successfully completed.
NJ bankruptcy practitioner, Robert Manchel, may be reached at (866) 503-5655 to discuss your specific circumstances.