How Chapter 13 Bankruptcy Works for People With Regular Income in New Jersey

For many New Jersey residents, financial hardship does not come from a lack of income but from overwhelming debt. If you earn a steady paycheck yet struggle to keep up with bills, Chapter 13 bankruptcy may be a powerful solution. At Carroll Law Firm, P.C., we help individuals and families understand their options and create a path toward financial stability.

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy—often referred to as a “wage earner’s plan”—allows individuals with regular income to reorganize their debt into a manageable repayment plan. Unlike Chapter 7, which involves liquidating non-exempt assets, Chapter 13 focuses on restructuring debt over time while allowing you to keep property such as your home and car.

How the Repayment Plan Works

When you file for Chapter 13 in New Jersey, you propose a repayment plan that usually lasts three to five years. The plan consolidates eligible debts, such as mortgage arrears, car loans, medical bills, and credit card debt. Instead of juggling multiple payments, you make a single monthly payment to a bankruptcy trustee, who then distributes the funds to your creditors.

The amount of your monthly payment depends on factors like:

• Your income and expenses
• The total amount of debt you owe
• Whether your debts are secured (like a mortgage) or unsecured (like credit cards)

Key Benefits of Chapter 13

• Stops foreclosure: Chapter 13 can help you catch up on missed mortgage payments while keeping your home.
• Protects assets: You can retain property that might be sold in Chapter 7.
• Consolidates payments: A single, manageable monthly payment replaces multiple debts.
• Protects co-signers: Chapter 13 may shield co-signers from creditor actions on consumer debts.

Who Qualifies?

To be eligible for Chapter 13 bankruptcy, you must:

• Have a regular source of income
• Have debts within the limits set by federal law
• Be able to make payments under a court-approved plan

Taking the First Step

Filing for bankruptcy is not a decision to be made lightly. However, for New Jersey residents with steady income who feel trapped by debt, Chapter 13 can provide a structured, court-supervised way to regain control.

At Carroll Law Firm, P.C., we can provide legal assistance to the New Jersey public by reviewing your financial situation, explaining your options, and guiding you through the bankruptcy process.