How to Qualify for Chapter 13 Bankruptcy in New Jersey
Chapter 13 bankruptcy is a form of debt relief designed for individuals who are unable to pay their debts but wish to avoid foreclosure or repossession. In New Jersey, qualifying for Chapter 13 bankruptcy involves meeting specific criteria outlined by federal laws. Understanding these requirements is crucial for anyone considering this option.
1. Eligibility Requirements
To qualify for Chapter 13 bankruptcy in New Jersey, you must meet the following criteria:
- Your debts must fall below a specific limit set by the Bankruptcy Code. As of April 2022, the unsecured debt limit is $419,275, and the secured debt limit is $1,257,850. Make sure to verify current limits as they can change.
- You must have a regular source of income. This income can be from employment, business profits, or other consistent sources, such as social security or alimony.
- Be a resident of New Jersey or have a designated property in New Jersey. This is necessary to file for bankruptcy in this state.
2. Credit Counseling Requirement
Before filing for Chapter 13 bankruptcy, it is mandatory to undergo credit counseling from a government-approved agency. This counseling must occur within 180 days prior to your bankruptcy filing. The goal of this requirement is to help debtors explore other options for managing their debts.
3. Complete the Bankruptcy Forms
Once you’ve completed your credit counseling, you’ll need to fill out several bankruptcy forms that disclose your financial situation, including your debts, assets, income, and living expenses. Accurate and comprehensive information is vital, as inaccuracies can lead to denial of your application.
4. Create a Repayment Plan
In Chapter 13 bankruptcy, you must develop a repayment plan that outlines how you intend to pay off your debts over a period of three to five years. This plan must be feasible and adhere to the specific requirements, allowing debtors to keep their assets while making monthly payments to creditors.
5. Bankruptcy Filing Fee
To file for Chapter 13 bankruptcy, there is a mandatory filing fee, which can vary over time. Additionally, you may incur attorney fees if you choose to seek professional assistance. If you cannot afford the fee, you may request a fee waiver or request to pay in installments.
6. Attend the Meeting of Creditors
After your petition is filed, you will attend a meeting of creditors (also known as a 341 meeting). During this meeting, you will be required to answer questions regarding your financial situation and repayment plan. Your creditors may attend, but often they do not. It’s crucial to be honest and forthcoming during this meeting.
7. Confirmation of Your Repayment Plan
The next step is getting your repayment plan confirmed by the bankruptcy court. The court will review your plan to ensure it meets legal standards and is fair to creditors. If the court approves your plan, you must adhere to it to eliminate your debts successfully.
Conclusion
Qualifying for Chapter 13 bankruptcy in New Jersey requires meeting certain financial limitations and following proper legal procedures. It’s advisable to consult with a qualified bankruptcy attorney who can guide you through this complex process and ensure you meet all requirements. This will help you reclaim financial stability and take control of your debts.