Is Chapter 13 bankruptcy the best choice for my situation?

Financial challenges can crop up without warning and many New Jersey residents suddenly find themselves facing mounting debts and the inability to pay them. While the concept of bankruptcy might stoke fear and reluctance, it is a legal and effective strategy to get into a better financial situation and move forward. Given the current health crisis, the number of people who are suddenly unemployed and are unsure about how they will make ends meet has been rising dramatically. Bankruptcy is a viable option, but it is imperative to understand which chapter suits a person’s case. For those who own a home and other property they want to retain, Chapter 13 might be preferable.

Chapter 13 is a payment plan where people can keep certain properties

When people hear the term “bankruptcy,” they might automatically think that they will lose property to pay their debts. Chapter 13 lets people retain their property and make a monthly payment to a trustee. That money will then be distributed to creditors. Those who have a job and are earning income can benefit from Chapter 13. The duration of the plan will be either three or five years, depending on whether the person’s income is higher or lower than the state median. If it is lower, the plan will be for three years; if it is higher, it will be for five years.

Those concerned about their home being foreclosed upon can avoid that with a Chapter 13. If they are behind on mortgage payments, the Chapter 13 payment plan will allow them to repay what is owed until they are current. While the Chapter 13 is in progress, the mortgage payments must be made on time and in full. Other debts can be rescheduled during the Chapter 13. Payments may be lower than they would otherwise be if the person did not file for Chapter 13. In general, a Chapter 13 is comparable to a loan which will consolidate the debts.

Legal assistance may be essential when considering bankruptcy

Some of the biggest challenges of overwhelming debt go beyond what is owed and extend to the seemingly never ending phone calls and letters from creditors about late and missed payments. A Chapter 13 bankruptcy will put a stop to the harassment along with helping a person cobble a strategy that lets them pay their debts over time and retain certain properties. Those struggling with debt should know about the options available to them. Consulting with a firm that has experience in bankruptcy and helping people with debt relief can be beneficial to moving forward with a case.


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