While there are several kinds of bankruptcy, most people file either a Chapter 7 or a Chapter 13 bankruptcy.
Chapter 13 is often used for individuals with regular income that have a large amount of equity in a home or a car and wish to keep those assets.
In a NJ Chapter 13 Bankruptcy, the court must approve a 3-to-5-year payment plan, which generally provides for curing any pre-petition delinquency, maintaining payments on secured debt, and a payment to unsecured creditors based on the debtor’s disposable income.
Debtors will receive a discharge at the end of the Chapter 13 Plan.
As of April 1, 2022 individuals can owe more debt and still qualify for Chapter 13
The Bankruptcy Code sets specific limits on the amount of unsecured and secured debt that someone can have and still qualify for a Chapter 13 bankruptcy.
The new debt limits for Chapter 13 are effective for cases filed on or after April 1, 2022 and will be in effect for the next 3 years.
The debts limits are as follows:
- Unsecured debt = $ 465,275
- Secured debt = $1,395,875
Is my Debt Secured or Unsecured?
An unsecured debt does not have some property or asset serving as collateral for payment of the debt. Common examples include credit card debt, medical bills and utility bills.
A secured debt has property as collateral. If you default on a secured loan, the lender can take the property. The most common types of secured debt are mortgages on real estate and automobile loans. When a secured lender is not paid, they can foreclose on your home or repossess your vehicle.
The debt limits apply to debts that are liquidated and non-contingent
In determining whether the debt limits are exceeded, only noncontingent, liquidated debts are counted. It is therefore important to speak to an attorney competent in Chapter 13 bankruptcy when performing the analysis.
Alternatives to Chapter 13 Bankruptcy
If you exceed the Chapter 13 debt limits, there are still other bankruptcy options. You may consider filing a Chapter 11 bankruptcy to obtain many of the benefits of Chapter 13 bankruptcy.
Some debtors file a “Chapter 20.” Under this strategy, the debtor first files a Chapter 7 to discharge much of his unsecured debts (assuming the debtor meets the Chapter 7 means test). Once the debtor gets the discharge and lowers the total amount of unsecured debt, they can then file a Chapter 13 case to restructure the remainder of the debts.
You Need an Attorney to Defend Your Legal Rights
At Levitt & Slafkes, P.C. we appreciate the gravity of these proceedings on your financial future and your life. With over thirty years of experience, we know the law and take pride in getting things right the first time. Let us help you attain some much-needed debt relief. Call our office at 973-323-2953, or contact us online to schedule an appointment.
We are proudly designated as a debt relief agency by an Act of Congress. We have proudly assisted consumers in filing for Bankruptcy Relief for over 30 years.