A Chapter 13 bankruptcy in New Jersey may be filed by individuals who have a ‘regular source of income’ as well as some disposable income to apply towards their Chapter 13 payment plan. They must present this plan to repay all or part of their debts and must provide for fixed monthly payments to be made to the Trustee for a period of 3-5 years, depending on income and other factors.  The plan must be approved by the court at a Confirmation Hearing.

The Trustee begins collecting funds from the debtor during the first full month following the filing.  The Trustee then begins to distribute funds to creditors according to the terms of the plan.

Filing a Chapter 13 petition automatically stops most collection actions against debtors and their property (the ‘automatic stay’).  A Chapter 13 case is often used to stop foreclosure proceedings and repay a mortgage delinquency, to stop an eviction and repay rent arrears, or to prevent the repossession of a vehicle.  As long as the automatic stay is in effect, creditors may not start or continue a lawsuit, wage garnishment or demand payment.  That said, there are exceptions to the automatic stay such as a criminal proceeding.  A Chapter 13 bankruptcy case is a re-organizational case whereas a  Chapter 7 bankruptcy case is a liquidating case (a consultation with one of our experienced bankruptcy attorneys is necessary to give you a full understanding of the differences and what is right for you).

This page deals specifically with Chapter 13 bankruptcy in NJ and what it can — and cannot — do for you.

What is the income limit for filing Chapter 13?
There is no limit on income that prevents someone from qualifying for Chapter 13, although there is a maximum debt allowed. It should be noted that a person with sufficient income to pay all of their debts will most likely see their bankruptcy petition denied. It’s best to consult with an attorney before filing the petition to determine whether you are qualified or not based on your specific financial circumstances.

How much does it cost to file Chapter 13 in NJ?
The Clerk of the Bankruptcy Court charges a $338.00 filing fee when the case is filed and the Chapter 13 Legal fees of course can vary.  The bankruptcy attorney can charge an hourly fee or a flat fee.  The New Jersey Bankruptcy Court has established a uniform suggested flat fee.  We offer our clients a free consultation during which the options available regarding attorney and Bankruptcy Court filing fees can be discussed.

If you are considering bankruptcy, feel free to contact us for a consultation, so together we can determine the strategy that is right for you.