A Basic Introduction to Personal Bankruptcy Under Chapter 13

Reorganizing your personal debts through bankruptcy filing

If you’re one of the millions of Americans hurt economically by the coronavirus pandemic—whether due to temporary layoff or permanent closure of your company—you may be struggling to pay your mortgage, car payments, and other obligations. A personal bankruptcy filing can bring immediate relief from incessant phone calls and letters. To discharge debts under Chapter 7, you must submit to a means test, and if you qualify, you’ll have to relinquish some of your assets to the bankruptcy court to be sold to satisfy your creditors. If you simply need a breather, though, a Chapter 13 petition is an option that might meet your needs.

Under Chapter 13—also known as a “debtor’s reorganization”—you and your attorneys will put together a plan to repay your creditors over a three-to-five-year period. Your lawyer will help carefully craft a plan that will work for you, with payments you’ll be able to make based on your income. If you don’t honor your commitments under the Chapter 13 plan, the court can terminate your bankruptcy (and the protections it brings).

Once you put together a plan, it goes to your creditors for approval and also must be reviewed and approved by the bankruptcy court. However, you’re entitled to the protections of the automatic stay of bankruptcy from the moment you file your Chapter 13 petition. That stay prevents creditors from calling, writing, or taking legal action against you and remains in effect throughout the three-to-five-year repayment period, provided you follow the terms of your reorganization. Because you’ll actually renegotiate your debt, you also might be able to get creditors to waive late fees and penalties, and you may end up paying less than 100% of the debt.

Contact Attorney Howard N. Sobel

At the office of Howard N. Sobel, we work closely with people in New Jersey who wish to file for personal bankruptcy. Contact our office online or call us at 856-424-6400 to set up a free initial consultation (on selected cases). We are currently available by phone, text message, or videoconference only. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.

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