Chapter 13

Chapter 13 Bankruptcy

home-167734_960_720Representing New Jersey Individuals in Bankruptcy Laws

When facing seemingly insurmountable financial problems, consider a bankruptcy filing. Also known as a wage earner’s plan, Chapter 13 bankruptcy enables an individual to pay back all or most of the debt that is owed to creditors. Chapter 13 allows individuals with regular income to develop a repayment plan over 3 or 5 years. Chapter 13 has a number of advantages over Chapter 7 bankruptcy. An individual is able to protect the home from foreclosure. Another advantage is the fact that Chapter 13 permits the ability to reschedule most unmanageable secured debts and extend them over the life of the Chapter 13 plan. Finally, Chapter 13 acts as a consolidation loan. The debtor will make payments to the trustee and not have further contact with creditors. Cohn Lifland has the experience and skill to guide you through the Chapter 13 bankruptcy process. If you need our legal services, contact Cohn Lifland today.


According to federal guidelines, even if a person is self-employed or operates an unincorporated business, he or she is eligible for Chapter 13 if the individual’s unsecured debts are less than $383,175 and secured debts are less than $1,149,525, with periodic adjustments to reflect changes in the consumer price index. An individual cannot file for bankruptcy if another petition was dismissed within 180 days for a number of reasons. In order to be eligible, you must have received credit counseling from a state-approved credit counseling agency within the 180 days prior to filing.

Starting the Process

To start the process of Chapter 13 bankruptcy, you must file a petition with the bankruptcy court in New Jersey. The debtor must file documents that include:

  • A list of assets and liabilities
  • A list of income and expenditures
  • A list of executory contracts and unexpired leases
  • A statement of financial affairs

In addition, an individual must file documents that include:

  • A certificate of credit counseling and any plans developed through the counseling
  • Evidence of any payment from employers received six months days prior to filing
  • A report of monthly net income and any expected increase in income or expenses after filing
  • A statement of any interest the debtor has in state or federally-qualified education or tuition accounts.

Once you have satisfied the requirements of the courts, a U.S Trustee will be assigned to your case and an automatic stay will cease communication from creditors and begin the proceeding. Once the Chapter 13 proceeding commences, foreclosure of a house stops immediately. It is important to note that a debtor must file a repayment plan with a petition or within 14 days of the petition unless granted an extension by the court.

Meeting of Creditors

A few weeks after the petition is filed, the trustee will hold a meeting of creditors. This is a deposition in which the debtor is under oath and answers questions in the presence of an attorney and any creditors that want to attend. The trustee will ask a wide variety of questions to establish a clear picture of the situation. Creditors are also allowed to ask questions, but on a limited basis. The parties will then discuss a repayment plan. Most of the time, a meeting of creditors will be the last time a debtor will have to attend any meeting, and most outstanding issues are resolved during or close after the meeting.

The Chapter 13 Plan and Confirmation Hearing

A repayment plan should have been filed with the petition. The plan will be submitted to the court for approval and must detail installments of payments to the trustee, who will then distribute the money to the creditors in the case. Often, a payment schedule will be on a bi-weekly or monthly basis. A debtor will be obligated to start payments within 30 days after filing for Chapter 13. Within 45 days of the meeting of creditors, a judge will decide on the plan, reviewing the terms to make sure they are feasible and follow the bankruptcy code.  

Chapter 13 Discharge

A debtor is obligated to pay a certain amount of debt through a repayment plan. Once the payment plan is complete, most unsecured debts are discharged and wiped clean. The scope of a Chapter 13 discharge is complex and continues to change. Creditors who have collected as part of the Chapter 13 repayment plan may no longer initiate or continue legal action against the debtor after a discharge is granted.

Contact Cohn Lifland

Cohn Lifland has years of experience guiding New Jersey clients through Chapter 13 bankruptcy proceedings. Our firm has the skill and knowledge to ease your stress during this tough time. We will effectively represent your interests through the document-heavy process and help you draft a repayment plan that will satisfy the court. If you need quality legal services, contact Cohn Lifland today.


Jeffrey W. Herrmann

Cohn, Lifland, Pearlman, Herrmann and Knopf LLP