Bankruptcy is the last resort for most individuals in New Jersey. If if you struggle financially, it can help you get a handle on debt and improve your long-term situation. We often help clients create a plan and file for personal bankruptcy.

According to the United States Courts, chapter 13 bankruptcy includes a plan that repays your debts in three to five years. There are several benefits of filing this type of bankruptcy

Save your home

Lending institutions typically require that borrowers pay back the full amount they owe once they fall behind in payments. If you have financial constraints that make this unrealistic, the bank may start foreclosure proceedings. However, debtors in Chapter 13 bankruptcy can dictate repayment terms to the lender and break past-due amounts into smaller payments.

Modifying your second or third mortgage might also be an option. For those underwater on their home, the court may consider mortgage liens on your first mortgage undersecured. This makes it eligible for removal by the bankruptcy court.

Help with IRS debts

Unlike Chapter 7, Chapter 13 can help with IRS problems. In some cases, it can include the reduction or removal of tax liens. The court may allow for the discharge of certain types of taxes as unsecured debts, similar to medical or credit card bills.

Once approved, your bankruptcy acts like a consolidation loan. You pay the court-appointed trustee, and they distribute the payments to creditors appropriately. If there is still outstanding debt at the end of your payment plan, the court typically discharges it. Chapter 13 has a provision that could protect co-signers who have the same liability on consumer debts as you.

Debtors have no further responsibility for the remaining debt once discharged. Every situation is unique. Attorneys with experience in bankruptcy law can build the solution that works best for the clients and helps them move with the rest of their life.