Many people in New Jersey face financial challenges. This issue has come to the forefront in the past several years with many facing medical expenses, lost income, outright job loss and more. This may lead to overextending on credit cards, compounding debt and seeking solutions to get into a better financial position. Often, people are reluctant to think about bankruptcy, but it is a tried and true strategy to clear debts and stop the endless fear and worry that accompanies it.
How do I make the Chapter 13 plan succeed?
Chapter 13 bankruptcy is a way to retain various properties that would not be kept in a Chapter 7 liquidation. Knowing how to complete the plan successfully is a crucial aspect that should be understood. Under Chapter 13, the debtor will make monthly payments to a trustee based on a plan of three or five years. The duration depends on the person’s income. Those who earn more than the state median will usually get five years; those who earn less will get three years.
In general, the payments are made every month. By doing this, the creditors will receive a certain amount of the debt and the debtor can keep properties that would otherwise be taken and sold. If, for example, the person owns a home, they can keep the home. If the payments are not made, then the case can either be dismissed or converted to a Chapter 7 liquidation.
If the debtor makes the payments on time and in full, then the case is likely to result in a discharge and they can move on without the onerous payments that were causing problems. The trustee will distribute those payments to the creditors. People who are receiving frequent calls, messages and letters about their debt will benefit first from the automatic stay that stops collection actions – including attempted foreclosure. As the Chapter 13 proceeds, creditors can no longer garnish wages, commit harassment or pursue lawsuits.
Help with pursuing a Chapter 13
The personal, financial and emotional stress of massive debt can be overwhelming. Before dismissing the idea of bankruptcy as if it is an attempt to avoid responsibility or should be perceived as a negative decision, it is useful to consider the positives that can be achieved. Retaining a home and clearing debt are examples. When thinking about bankruptcy, it is imperative to have professional guidance to decide on the appropriate chapter and follow the requirements to make it a success.