When a person files for Chapter 13 bankruptcy in New Jersey, part of the process is a requirement that the filer, also called the petitioner, submit a repayment plan to the bankruptcy court. Unless the court grants the petitioner an extension, he or she must submit the repayment plan within 14 days after the petition is filed. The repayment plan may be submitted at the same time as the petition. The submitted plan must provide for payments to be made to the bankruptcy court in fixed amounts on a regular basis.
Typically, the plan will set out payments to be made either monthly or biweekly. After each payment is made, the bankruptcy trustee will distribute the funds to the petitioner’s creditors according to the plan’s terms. In a Chapter 13 bankruptcy, the creditors might not be entitled to collect the full amounts of their debts. There are three different kinds of claim that a creditor may have: secured, unsecured and priority.
A secured claim is one for which the creditor has the right to claim collateral if the debtor does not satisfy the debt. Creditors holding unsecured claims have no right to take ownership of property held by the debtor. Priority claims include many tax claims and the bankruptcy court’s costs; they are claims to which that the bankruptcy process grants special rights. In most Chapter 13 cases, priority claims must be paid in full unless the creditor agrees to a lesser payment.
People in New Jersey who file for Chapter 13 bankruptcy may be able to eliminate debts by paying down what they can over a period of three or five years. An attorney who practices bankruptcy law might be able to help interested parties by drafting and filing the bankruptcy petition, assisting the client with pre-bankruptcy counseling or communicating with the bankruptcy trustee on the client’s behalf.