Chapter 13 is a type of bankruptcy often used by debtors to save their home by paying mortgage arrears over time. However, when filing Chapter 13, a debtor is obligated to pay priority claims in full through the bankruptcy as well. Priority claims include domestic support obligations such as child support, certain types of taxes, claims for personal injuries from a motor vehicle accident when driver was intoxicated, and other types of claims are priority claims. In certain circumstances, this obligation could make retaining the home more difficult since instead of paying just the mortgage arrears, these priority claims must be paid as well. However, it could also make keeping the home easier since it may be more affordable by stretching these payments out over five years.
Pro: Bankruptcy can often be used to eliminate or significantly reduce unsecured debt.
There are many reasons that people in New Jersey decide that they need to file for a bankruptcy. These include the high debts that some have accumulated over the past few years during the recession. When the amount that is owed is more than a person can repay, they often find that a personal bankruptcy can help.