Understanding What Debts Can Be Discharged in Chapter 13 Bankruptcy in New Jersey
May 16, 2025
Chapter 13 Bankruptcy in New Jersey: What Debts Can Be Discharged?
Filing for Chapter 13 bankruptcy in New Jersey offers individuals a way to reorganize their debts while protecting their assets. Unlike Chapter 7, which liquidates assets to pay creditors, Chapter 13 allows you to create a repayment plan over three to five years. At Carroll Law Firm, P.C., we help New Jersey residents understand what debts can be discharged through Chapter 13 and how this process can offer long-term financial relief.
Debts Eligible for Discharge in Chapter 13 Bankruptcy
Chapter 13 bankruptcy includes a broader discharge of debts than Chapter 7. Some of the most common dischargeable debts in Chapter 13 include:
- Credit Card Debt: Most unsecured credit card balances can be discharged.
- Medical Bills: Any outstanding medical debts are typically eligible for discharge.
- Personal Loans: Unsecured personal loans, including payday loans, may be discharged.
- Utility Bills: Past due utility bills are generally included in the discharge.
- Certain Older Tax Debts: Some income taxes may be dischargeable if they meet specific criteria related to the age of the debt and timely filing.
- Lease Obligations and Repossession Deficiencies: If you surrendered a car or property, the remaining debt could be wiped out.
- Court Judgments: Some civil court judgments can be discharged, excluding those related to fraud or intentional wrongdoing.
Debts That Generally Cannot Be Discharged
It’s important to note that not all debts qualify for discharge in Chapter 13:
- Student Loans: These are usually non-dischargeable unless you can prove undue hardship, which is difficult.
- Domestic Support Obligations: Child support and alimony payments remain your responsibility.
- Most Tax Debts: While some older tax debts may qualify, most recent or unpaid taxes do not.
- Debts for Personal Injury or Death Caused by DUI: These debts remain in place regardless of bankruptcy.
- Fines and Penalties Owed to Governmental Units: Most of these are not dischargeable.
Benefits of Chapter 13 for Non-Dischargeable Debts
Even when a debt can’t be discharged, Chapter 13 offers major advantages:
- You can stop foreclosure and catch up on mortgage arrears over time.
- It allows for structured payments on priority debts like taxes or domestic support obligations.
- Interest and penalties may stop accruing on certain debts during the repayment plan.
How Carroll Law Firm, P.C. Can Help
At Carroll Law Firm, P.C., we understand the financial stress you may be under and the importance of finding the right solution. Our team works closely with New Jersey residents to evaluate their unique financial circumstances and guide them through the Chapter 13 process. We will help determine which debts can be discharged and how to create a plan that puts you on the path to long-term stability.
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A Guide to Filing for Chapter 7 Bankruptcy in New Jersey
Financial difficulties can be overwhelming, but bankruptcy offers a way to regain control and achieve a fresh start. In New Jersey, the two most common types of bankruptcy for individuals are Chapter 7 and Chapter 13. Each has its own benefits, requirements, and implications. At Carroll Law Firm, P.C., we specialize in helping clients navigate the complexities of bankruptcy law. Here’s a detailed look at the differences between Chapter 7 and Chapter 13 bankruptcy, and how each can help you achieve financial stability. What is Chapter 7 Bankruptcy? Chapter 7 bankruptcy, also known as liquidation bankruptcy, allows individuals to discharge most of their unsecured debts, such as credit card debt and medical bills. In exchange, the debtor’s non-exempt assets are sold to repay creditors. Advantages of Chapter 7: Quick Process: Chapter 7 bankruptcy typically takes about 3 to 6 months to complete. Debt Discharge: Most unsecured debts are completely discharged, giving you a fresh financial start. No Repayment Plan: Unlike Chapter 13, there is no need to create a repayment plan; the process focuses on liquidating non-exempt assets. Disadvantages of Chapter 7: Asset Liquidation: Non-exempt assets may be sold to repay creditors, which could include valuable property. Impact on Credit: Filing for Chapter 7 bankruptcy will negatively impact your credit score and remain on your credit report for 10 years. Eligibility Requirements: Not everyone qualifies for Chapter 7 bankruptcy. You must pass a means test to demonstrate that your income is below a certain threshold. What is Chapter 13 Bankruptcy? Chapter 13 bankruptcy, also known as reorganization bankruptcy, allows individuals to keep their assets while repaying a portion of their debts over a 3 to 5-year period. This type of bankruptcy is suitable for those with a regular income who can afford to make monthly payments. Advantages of Chapter 13: Asset Protection: You can keep your property, including your home and car, as long as you comply with the repayment plan. Debt Consolidation: Chapter 13 allows you to consolidate your debts into a single monthly payment, making it easier to manage your finances. Stopping Foreclosure: Filing for Chapter 13 can stop foreclosure proceedings and allow you to catch up on missed mortgage payments. Disadvantages of Chapter 13: Longer Process: Chapter 13 involves a 3 to 5-year repayment plan, which is a longer commitment compared to Chapter 7. Regular Income Requirement: You must have a regular income to qualify for Chapter 13, as you need to make consistent monthly payments. Debt Limits: There are limits to the amount of debt you can have to qualify for Chapter 13 bankruptcy. As of 2021, these limits are $419,275 for unsecured debt and $1,257,850 for secured debt. Choosing Between Chapter 7 and Chapter 13: The choice between Chapter 7 and Chapter 13 bankruptcy depends on your specific financial situation and goals. Here are some considerations: Income Level: If your income is below the state median and you pass the means test, Chapter 7 may be the best option. If you have a regular income and can make monthly payments, Chapter 13 might be more suitable. Asset Protection: If you have significant assets that you want to protect, Chapter 13 allows you to keep your property while repaying your debts. Type of Debt: If you have primarily unsecured debts and no substantial assets, Chapter 7 can provide a quicker resolution. If you have secured debts and want to avoid foreclosure or repossession, Chapter 13 can offer better protection. Understanding the differences between Chapter 7 and Chapter 13 bankruptcy is crucial for making an informed decision about your financial future. At Carroll Law Firm, P.C., we are dedicated to providing compassionate and effective legal representation to help you navigate the bankruptcy process and achieve financial stability.
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Understanding The Benefits Of Chapter 11 Bankruptcy In New Jersey Facing financial difficulties can be overwhelming, but it's important to know that there are options available to help you get back on track. One such option is filing for Chapter 11 bankruptcy, which can provide individuals and businesses with a path towards financial stability. In this blog post, we will explore the benefits of filing for Chapter 11 bankruptcy, who should consider this option, and how Garden State Bankruptcy can assist the New Jersey public with their Chapter 11 bankruptcy matters. Chapter 11 bankruptcy is often referred to as reorganization bankruptcy because it allows businesses and individuals to restructure their debts while still remaining operational. One of the main benefits of filing for Chapter 11 bankruptcy is the ability to continue operating your business while developing a plan to repay creditors over time. This can provide much-needed breathing room for businesses that are struggling financially, allowing them to focus on turning their operations around without the constant pressure of mounting debt. Another benefit of filing for Chapter 11 bankruptcy is that it gives individuals and businesses the opportunity to renegotiate their debts with creditors. Through the process of restructuring their debts, filers may be able to reduce the total amount owed, lower interest rates, or extend repayment terms. This can make it easier for filers to meet their financial obligations and ultimately emerge from bankruptcy in a stronger financial position. Chapter 11 bankruptcy also provides protection from creditors through an automatic stay, which halts all collection actions against the filer. This means that creditors cannot pursue legal action, garnish wages, or seize assets while the filer works on developing a repayment plan. The automatic stay can provide much-needed relief from creditor harassment and give filers the time they need to assess their financial situation and come up with a viable plan moving forward. Who should consider filing for Chapter 11 bankruptcy? Businesses that are struggling financially and facing insurmountable debt may benefit from this type of bankruptcy as it allows them to reorganize their finances while remaining operational. Individuals who have significant assets or income may also find Chapter 11 bankruptcy beneficial as it provides them with a structured way to repay their debts without having to liquidate all of their assets. Filing for Chapter 11 bankruptcy can provide individuals and businesses in New Jersey with a fresh start when faced with overwhelming debt. By allowing filers to restructure their debts, negotiate with creditors, and continue operating their business, Chapter 11 bankruptcy offers a path towards financial stability. If you are considering filing for Chapter 11 bankruptcy in New Jersey, Garden State Bankruptcy is here to assist you every step of the way. Our experienced team can help you navigate the complexities of Chapter 11 bankruptcy proceedings and develop a plan that suits your unique financial situation. Don't let financial difficulties hold you back – contact Garden State Bankruptcy today to learn more about how we can help you achieve financial freedom through Chapter 11 bankruptcy.