The concept of bankruptcy can be very discouraging, especially if you are facing constant harassment from creditors for unpaid bills. If you are facing any creditor action, such as the foreclosure of your home, garnishment of your wages, or the seizure of your bank account, you may be an excellent candidate for Chapter 13 bankruptcy.

At the Law Office of David A. Semanchik, I have more than 25 years of experience providing New Jersey clients with lasting legal solutions to bankruptcy problems. Chapter 13 bankruptcy can be a complex process in which there are many potential pitfalls. However, an experienced Chapter 13 bankruptcy attorney like myself can provide effective guidance. The Law Office of David A. Semanchik serves clients in Toms River and throughout New Jersey, including Brick Township, Manasquan, Manchester, and Lacey.

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Overview of Chapter 13 Bankruptcy

Chapter 13 Bankruptcy aims to provide help for individuals, married couples, and unincorporated businesses by allowing them to pay off their debts over an extended amount of time. Also known as the “wage earner’s plan,” Chapter 13 allows you to keep most of your valuable assets if you can maintain the repayment plan.

There are several advantages to Chapter 13 bankruptcy. One of the biggest advantages is that you are able to keep assets, such as your house, that would otherwise be liquidated under a Chapter 7 bankruptcy. Of course, this requires you to consistently make your court-mandated monthly payments on time and as agreed to. 

It’s also worth noting that under Chapter 13 some secured debt balances can be significantly reduced and unsecured debts may be able to be fully discharged once the repayment plan is completed.

When filing Chapter 13, it’s important to be aware that not all debts are dischargeable. Debts that are not discharged include child support, spousal support, and certain tax obligations.

Qualifying for Chapter 13

Like any bankruptcy, there is a set of qualifications that must be met by the petitioner before filing Chapter 13 bankruptcy. In order to qualify for Chapter 13 bankruptcy, you must demonstrate that you have the means to make regular monthly payments. To demonstrate that, you must disclose sources of income and submit the information to the court within 14 days of filing a petition.

You also need to be current in your tax filings. You are required to submit proof that you filed state and federal tax returns for the past four years. If you can’t do this, your case can be delayed until you can or will be dismissed if you are unable to produce or offer transcripts of your returns.

The Process of Filing

Once everything is filed, the bankruptcy trustee will review the debts and income statements, and then schedule a hearing to decide whether the plan is acceptable. The Chapter 13 process begins by filing a petition in which you disclose to a court the following:

  • Schedules of assets and liabilities

  • Schedules of current income and expenditures

  • Schedules of executory contracts and unexpired leases

  • Statement of financial affairs

When you file your bankruptcy petition, an “automatic stay” goes into effect and prevents most of your creditors from trying to collect on the debts. Your creditors will not be allowed to file or continue a lawsuit against you, garnish your wages, or call you to demand payment. In a Chapter 13 bankruptcy, the automatic stay also protects any co-debtors if the debt is consumer debt.

You are required to file a repayment plan with the petition or within 14 days after the petition is filed unless the court grants an extension. A plan must provide for payments of fixed amounts to the trustee on a regular basis, generally bi-weekly or monthly. The trustee then distributes the funds to creditors according to the terms of the plan. When the repayments are completed, the Chapter 13 case will be discharged. A Chapter 13 bankruptcy case typically takes three to five years to complete.

Chapter 13 Bankruptcy Attorney Serving Toms River, New Jersey

Chapter 13 bankruptcy can be a complicated and stressful process, but an experienced Toms River, New Jersey bankruptcy attorney can get you on the right path to move forward. At the Law Office of David A. Semanchik, I take pride in my approach to the well-being of my clients and am proud to serve them from the moment they step foot into my office until well after the bankruptcy process is complete. Contact me today for a free initial consultation.