How Chapter 13 Bankruptcy Works for People With Regular Income

Bankruptcy can feel overwhelming, but for New Jersey residents with a steady income, Chapter 13 bankruptcy may provide a path to regain financial control without losing everything they have worked for. Unlike Chapter 7, which involves liquidating certain assets, Chapter 13 allows individuals to reorganize debt and pay it back over time. At The Law Offices of Andy Winchell, P.C., we help New Jersey residents understand how Chapter 13 can work for their circumstances.

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is sometimes called the "wage earner’s plan." It enables people with regular income to create a repayment plan, typically lasting three to five years, to pay back all or part of their debts. During this period, creditors must accept payments according to the court-approved plan, giving you breathing room to focus on stability.

Key Benefits of Chapter 13

• Avoiding foreclosure: Chapter 13 lets you catch up on past-due mortgage payments over time.
• Protecting property: Unlike Chapter 7, you generally keep your home, car, and other assets as long as payments are maintained.
• Consolidated payments: Instead of juggling multiple debts, you make one monthly payment to a bankruptcy trustee.
• Stopping creditor harassment: The automatic stay halts collection calls, lawsuits, and wage garnishments.

Who Qualifies for Chapter 13?

To be eligible, you must have:

• A regular source of income to support repayment.
• Secured and unsecured debts below certain limits.
• The ability to commit to a repayment plan that covers household needs and debt obligations.

How the Process Works

1. Filing the petition: This triggers the automatic stay, stopping collection efforts.
2. Submitting a repayment plan: The plan outlines how debts will be repaid over three to five years.
3. Court approval: The bankruptcy court reviews and approves the plan.
4. Making payments: Payments are made to a trustee, who distributes funds to creditors.

Moving Forward With Chapter 13

For many, Chapter 13 offers a realistic way to get out of debt while protecting important assets. It requires discipline and commitment but can provide a path toward financial recovery.

At The Law Offices of Andy Winchell, P.C., we can provide legal assistance to the New Jersey public in creating repayment plans and navigating the Chapter 13 process.