If you are drowning in debt, you may think that Chapter 7 dissolution is your only option. But what if you don’t qualify for Chapter 7 because you make too much money? Or you want to hold onto a secured asset, such as your home? Or what if most of your debt is non-dischargeable through Chapter 7? Fortunately, you can still get relief by filing for Chapter 13 reorganization. At Rothbard, Rothbard, Kohn & Kellar, we have been helping consumers in Newark and Essex County find relief through bankruptcy.
Chapter 13 bankruptcy is for consumers who earn a steady income, but need help getting out from under crushing debt. When you file Chapter 13, you and your attorney propose a payment plan, based on your monthly disposable income, where you repay what you owe in one manageable monthly payment. You pay the bankruptcy court, and the bankruptcy trustee distributes amounts to your creditors. Depending on your income and the amount you owe, the court orders you to stay on your plan for three to five years. If you are faithful and complete the plan, the court then discharges your remaining qualifying debt.
The court must approve your payment plan, which must be fair to your creditors and not too harsh on you. One of the steps in the process is the 341 Meeting of Creditors. At this meeting, your creditors can express any concerns they have with your plan. Usually, the 341 meeting is just a formality, but occasionally a creditor objects that a debtor does not deserve relief due to fraud or misrepresentation, or argues that more of the debt should be repaid. We provide determined representation at the 341 meeting and through every step of the process.
Through Chapter 13, you can often hold onto assets used as collateral to secure debt, while discharging about the same amount of unsecured debt as you would through Chapter 7. One major advantage comes when your house is underwater and you have more than one mortgage. Through a process called lien stripping, you can often discharge a second or third mortgage. Here’s how it works. If you took out a second or third mortgage on your house when the market was up, but your house has now lost value, your house may not be worth enough to act as collateral for all your mortgages. If that’s the case, any mortgage debt you have above the actual value of the house is unsecured. Your plan will require you to make current payments on your first mortgage, but at the end of your plan, the court can discharge your second and third mortgages along with other unsecured debt, such as your credit cards and medical bills.
As bankruptcy attorneys, we want to help you select the debt relief strategy that works best for your circumstances. But our advice is only as good as the information you can provide. At your first consultation, please provide us with:
We cannot recommend Chapter 13 or any debt relief strategy without first conducting a detailed analysis of your financial circumstances.
Rothbard, Rothbard, Kohn & Kellar provides reliable Chapter 13 bankruptcy representation for homeowners and other distressed consumers. Our Newark office is conveniently located at 50 Park Place on the 12th Floor, right across the street from Military Park and just one block southwest of the New Jersey Performing Arts Center. Call us at 862-227-8068 or contact us online to schedule a consultation.