New Jersey folks seek Chapter 13 bankruptcy after foreclosure

| Dec 4, 2012 | Chapter 13 |

The number of bankruptcy filings occurring in New Jersey and across the nation is down over the past year, according to a recent report. This includes Chapter 13 bankruptcy filings that seek to have a debtor repay much of what is owed to their creditors through a multi-year payment program. This type of bankruptcy is most often filed by those who are employed, thus it is sometimes called the wage-earner’s bankruptcy.

Filing for a Chapter 13 bankruptcy in New Jersey most often means that a person who has debts will repay their creditors some, if not all, of what is owed. This is accomplished through payments made to the creditors by the trustee assigned to the bankruptcy case. After the bankruptcy payments are finished, any remaining debts are discharged and the person who has sought the protections of a filing is free to begin a fresh financial start.

The decreased number of filings, some authorities suggest, may be due to the fact that many have been able to use their income to pay monthly debts because they have not been paying mortgage or rent payments. Because of the required review of foreclosures that has taken place since the large numbers of fraudulent or mishandled cases were discovered, many banks have been slow to foreclose on homes. Now that this review process is nearly completed, more folks may find that they must begin to pay for housing again.

This need to use cash for housing may lead additional people to seek the protections offered by a bankruptcy such as a Chapter 13. If that is the case, those filing for bankruptcy may find that they are able to keep many of their assets and that they will be relieved from creditor harassment. These benefits, along with the alleviation in the stress of working to repay large debts, may lead some in our state to consider a bankruptcy filing in the near future.

Source: Tampa Bay Times, “Backlog of bankruptcy cases persists despite drop in filings,” Jeff Harrington, Nov. 24, 2012