1. Home
2. Bankruptcy Articles
3. Chapter 13 Info Guide

FAQ'S

Chapter 13 Info Guide

1. What is a Chapter 13 bankruptcy?

A Chapter 13 bankruptcy may be filed by individuals with regular income. Debtors must present a plan to repay all or part of their debts. The plan must provide for fixed monthly payments to be made to the Chapter 13 trustee for a period of three to five years, depending on income and other factors. The plan must be approved by the court at a Confirmation Hearing.

The trustee begins collecting funds from the debtor during the first full month after the filing of the petition. Following confirmation of the plan, the trustee begins to distribute funds to creditors according to the terms of the plan.

Filing a Chapter 13 petition automatically “stays” (stops) most collection actions against debtors or their property. A Chapter 13 case is often used to stop foreclosure proceedings and repay a mortgage delinquency, or to prevent the repossession of a vehicle. As long as the automatic stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or demand payment. However, there are many exceptions to the automatic stay (a criminal proceeding, for example), and in some instances the automatic stay may only be in place for a short period of time.

A Chapter 13 case may be filed without an attorney, but it is a complicated process and it is highly recommended that you retain the services of an attorney. Your failure to meet all of the requirements of a Chapter 13 can result in a loss of protection of the automatic stay, or a dismissal of the case.

2. What do I need to do before filing a Chapter 13 case?

Before filing a Chapter 13 case, you MUST obtain credit counseling from an approved credit counseling agency. (11 U.S.C. § 109). The debtor must receive credit counseling within the 180 days before the bankruptcy petition is filed. If you and your spouse file a joint bankruptcy petition, both of you must obtain credit counseling.

Credit counseling may be conducted over the phone, over the internet or in person. When you complete credit counseling, the agency will provide you with a credit counseling certificate. This certificate must be filed with the court when the petition is filed.

3. Am I eligible to file a Chapter 13 case?

Only an individual with regular income who owes non-contingent, liquidated, unsecured debts (such as credit card debt or medical bills) of less than $307,675, and/or non-contingent, liquidated secured debts (such as mortgages or car loans) of less than $922,975, may be a Chapter 13 debtor. Individuals who operate businesses as sole proprietors may be a Chapter 13 debtor. Corporations and partnerships cannot file for relief under Chapter 13.

4. Where should I file my petition?

The petition and all documents relating to the bankruptcy case must be filed at the Bankruptcy Court Clerk’s Office located in the geographic area (commonly referred to as “vicinage”) in which the debtor resides. The Bankruptcy Court for the District of New Jersey is divided by county into three vicinages:

The Camden vicinage consists of Atlantic, part of Burlington (the townships of Cinnaminson, Delran, Edgewater Park, Evesham [Marlton], Maple Shade, Moorestown, Mt. Laurel, Palmyra, Riverside and Riverton), Camden, Cape May, Cumberland, Gloucester and Salem counties.

The Newark vicinage consists of Bergen, Essex, Hudson, Morris, Passaic, Sussex, and Union counties.

The Trenton vicinage consists of part of Burlington (excluded are the townships of Cinnaminson, Delran, Edgewater Park, Evesham Marlton, Maple Shade, Moorestown, Mt. Laurel, Palmyra, Riverside and Riverton), Hunterdon, Mercer, Middlesex, Monmouth, Ocean, Somerset and Warren counties.

CAMDEN NEWARK TRENTON

Mailing Address

Camden Region

US Post Office and Courthous

P.O. Box 2067

Camden, NJ 08101‑2067

Newark Region

Martin Luther King Jr., Federal Building

P.O. Box 1352

Newark, NJ 07101‑1352

Trenton Region

Clarkson S. Fisher U.S. Courthouse

402 East State Street

Trenton, NJ 08608

5. What filing fee do I have to pay?

The filing fee for a Chapter 13 petition is $274. The court does not accept cash or personal checks. The fee may be paid by money order, certified check, or bank check payable to the Clerk, United States Bankruptcy Court.

If the full filing fee cannot be paid at the time the petition is filed, Chapter 13 debtors may apply for an installment schedule by filing Form 3A Application to Pay Filing Fee in Installments. Debtors can make up to four installment payments. The final installment must be made within 120 days after the petition is filed. If the debtor fails to pay any installment when due, the case may be dismissed and the debtor will not receive a discharge of debts.

6. What forms do I have to file for a Chapter 13 case?

There are about fifty different forms that you have to file for a Chapter 13 case. The amount of forms that are required is mind numbing. After the law change in 2005, it is now virtually impossible for an individual person to file a bankruptcy on a pro se basis. Bankruptcy is serious business, and you need an experienced legal professional to represent you. If you only hire a petitioner preparer then there is a very good chance that your bankruptcy will turn into a disaster.

7. How many copies of all forms do I need to file?

When you file for bankruptcy, you must file an original and one copy of all forms.

8. What happens if I do not file all of the required forms?

Failure to file all the required documents at the time the petition is filed will result in the issuance of a Deficiency Notice. This notice advises debtors that they have 15 days from the date the petition is filed to submit all required documents or the bankruptcy case will be dismissed without further notice. Debtors may request an extension of the 15-day deadline by application to the court.

8. What happens after I file for bankruptcy?

Shortly after the petition is filed, a Chapter 13 trustee is appointed and the court will issue a Notice of Chapter 13 Bankruptcy Case, Meeting of Creditors & Deadlines. This notice is sent to all creditors in the case and contains the following information:

• Debtor’s name and address

• Date/time/location of the First Meeting of Creditors (also known as 341 Meeting)

• Deadline for creditors to file a proof of claim, if it appears there will be assets that can be liquidated to pay creditors.

• Deadline to file a complaint objecting to discharge or dischargeability of debts

• Deadline to object to the property you claimed as exempt

Note: Please read the notice carefully. The meeting may not be held in the courthouse, but may be held at another location.

9. What is the role of the trustee in my case?

The trustee is appointed by the United States Trustee to administer the case. The primary functions of the trustee are to examine your Chapter 13 plan, make recommendations regarding confirmation of the plan, receive and account for your payments made through the plan and serve as the disbursing agent to the creditors.

10. What is the First Meeting of Creditors, and how do I prepare for the meeting?

All debtors MUST attend the First Meeting of Creditors. Failure to attend may result in the dismissal of your case. If you and your spouse filed a joint petition, both of you must appear.

At the meeting, the Chapter 13 trustee will ask you questions, under oath, about what you owe, what you own, your income, and your Chapter 13 Plan.

No later than seven (7) days before the Meeting of Creditors, you must send the following to the trustee:

• A copy of your most recent federal income tax return (or transcript of return).

• Copies of pay stubs received within 60 days before the filing of the petition

NOTE: DO NOT SUBMIT PAY STUBS OR INCOME TAX RETURNS TO THE

COURT. Remember, it is the sole responsibility of the debtor to delete or black out sensitive information such as children’s names, account numbers (except the last 4 digits) and dates of birth (except the year). You should only show the last 4 digits of your Social Security number.

Bring the following with you to the First Meeting of Creditors:

• Picture identification

• Proof of Social Security number

• Market analysis of any real estate that you own

11. What is the Chapter 13 Plan?

The Chapter 13 Plan is a repayment plan, typically spread out over three to five years.

The Chapter 13 Plan must:

• provide for payments of fixed amounts to the trustee on a regular basis, typically monthly

• provide for the full payment of all claims entitled to priority under section 507, such as taxes and child support (unless the holder of a particular claim agrees to a different treatment of the claim)

• provide for equal monthly payments to secured creditors, such as mortgage companies and car lenders, to be paid through the Chapter 13 plan

• if the plan classifies claims, provide for the same treatment for each claim within each class

After the Meeting of Creditors has taken place, the court will hold a hearing to determine whether the plan filed with the court is feasible, complies with all requirements, and is otherwise confirmable. This hearing is referred to as the Confirmation Hearing. Creditors receive notice of the hearing and may object to the confirmation of the plan.

Starting with the first full month after you file your Chapter13 case, you must begin making payments to the trustee. Once your plan is confirmed by the court, the trustee will distribute the funds to creditors according to the terms of the plan.

12. After I file, what happens to my creditors’ collection activities against me?

Once the petition is filed with the court, the automatic stay will go into effect. The automatic stay is an injunction that automatically stops lawsuits, foreclosure, garnishments and all collection activity against you by your creditors for any debt which arose before the filing of the bankruptcy.

Note: There are exceptions which may result in the automatic stay not going into effect, or being limited in duration.

Some exceptions, but not all, are listed below:

• Debtor had a previous case pending within the preceding one‑year period, but the case was dismissed. In this situation, the automatic stay would terminate on the 30th day after filing the new case, unless the debtor applies for an extension of the automatic stay.

• Debtor had more than one previous case pending within the preceding one‑year period, but the cases were dismissed. In this situation, the automatic stay does not go into effect unless the debtor applies for imposition of the stay.

A creditor may file a Motion to Lift the Automatic Stay, which is a request by a creditor that, if granted, would allow the creditor to collect a debt against a debtor or the debtor’s property that would otherwise be prohibited by the automatic stay.

13. How do I amend my schedules after filing?

You may need to amend your original schedules filed with the petition. See, D. N.J. LBR 1009‑1. Click here for the amendment forms Amendment to Schedules D, E, F or List of Creditors.

The addition of new creditors requires a new matrix containing only those creditors being added. There is fee of $26 to amend Schedules D, E, or F. There is no fee if Schedule D, E, or F is amended to add the address of a listed creditor, or to add the name and/or address of an attorney for a listed creditor.

The court will issue and serve an Order Respecting Amendment.

14. What are my responsibilities while my Chapter 13 case is open?

• You must continue to pay all of your regular bills as they come due, including your monthly mortgage payment or rent.

• You must make monthly payments to the Chapter 13 Trustee according to your Chapter 13 plan.

• If you intend to sell any assets (including your home or car) while your Chapter 13 case is open, you must get court approval to do so by filing a motion with the court. Click here for our local rule on motions DNJ LBR 9013‑1

• If you plan to use a real estate broker, you must get court approval first.

• If you intend to refinance existing debt (including your mortgage) or incur new debt, you must obtain court approval to do so by filing a motion.

15. When do creditors file claims against me?

To participate in distributions from the bankruptcy estate, creditors must file their claims with the court within 90 days after the first date set for the First Meeting of Creditors.

Governmental units have 180 days from the date the petition is filed to file a proof of claim.

16. What is a discharge and how do I receive my discharge?

A discharge releases a debtor from personal liability for certain debts known as dischargeable debts and prevents the creditors owed those debts from taking any action against you or your property to collect the debts. The discharge also prohibits creditors from communicating with you regarding the debt, including telephone calls, letters, and personal contact.

When all plan payments have been made, a Chapter 13 debtor is eligible for a discharge, as long as you:

• certify (if applicable) that all domestic support obligations have been paid

• have not received a discharge in a Chapter 7 case during the four years preceding the new case

• have completed the Personal Financial Management course (Debtor Education).

Creditors provided for in the Chapter 13 plan may no longer initiate or continue any action against you to collect debts that have been discharged. However, there are exceptions to the discharge which include:

• debts for alimony and child support

• most student loans

• debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs

• debts for criminal fines or restitution.

NOTE: Once a debt is discharged, you are legally free of that debt. The discharge is a permanent order that prohibits creditors from taking any type of collection action on discharged debts. Any attempt to collect discharged debt is prohibited by bankruptcy law. For your own protection, you should maintain accurate records and copies of all matters related to your bankruptcy. In addition, you should routinely check your credit report with the various reporting agencies to ensure that discharged debts are not being reported as outstanding.

17. What is the Personal Financial Management Course (Debtor Education) ?

Debtors are required to complete an instructional course in personal financial management as a condition for receiving a discharge. This course is in addition to the credit counseling requirement. When the personal financial management course is completed, the debtor must file Official Form 23 ‑ Debtor’s Certification of Completion of Instructional Course Concerning Personal Financial Management.

If you and your spouse filed a joint petition, both of you must attend the course and both of you must file an Official Form 23. Official Form 23 should NOT be filed when you file the petition. It must be filed within 45 days of the first date set for the Meeting of Creditors. If Official Form 23 is not filed, the court may close the case without a discharge.

If you then file a motion to reopen the case to allow the filing of Official Form 23, you must pay the full filing fee due for filing such a motion. There are limited exceptions to the personal financial management course requirement such as incapacity or disability (defined in 11 U.S.C. §109(h)) or active military duty in a military combat zone. You must make the appropriate selection on Official Form 23 and file a Request for Exemption from Financial Management.