Chapter 13 bankruptcy is designed for individuals who need debt relief but have the financial means to repay their debts through a structured repayment plan. Unlike Chapter 7, which involves liquidating assets, Chapter 13 allows filers to retain their property while making manageable payments over three to five years. At Juan C. Velasco, Esq., we help New Jersey residents determine if they qualify for Chapter 13 bankruptcy and guide them through the filing process.

Eligibility Requirements for Chapter 13 Bankruptcy

To file for Chapter 13 bankruptcy in New Jersey, you must meet the following criteria:

1. You Must Have a Regular Source of Income

Since Chapter 13 involves a court-approved repayment plan, you must demonstrate that you have a steady income to cover both living expenses and debt payments. Acceptable income sources include:

• Employment wages
• Self-employment income
• Rental income
• Social Security or disability benefits
• Pension or retirement income

2. Your Debts Must Fall Within Certain Limits

As of 2024, the debt limits for Chapter 13 bankruptcy are:

• Unsecured debt limit: $465,275 (e.g., credit cards, medical bills, personal loans)
• Secured debt limit: $1,395,875 (e.g., mortgages, car loans)

If your debts exceed these amounts, you may need to explore Chapter 11 bankruptcy instead.

3. You Must Be Up to Date on Tax Filings

The bankruptcy court requires proof that you have filed state and federal tax returns for the past four years before approving your repayment plan.

4. You Cannot Have a Recent Bankruptcy Dismissal

If you have filed for bankruptcy before, you may still qualify, but if a previous bankruptcy case was dismissed within the past 180 days due to failure to comply with court orders, you may have to wait before refiling.

5. You Must Complete Credit Counseling

Before filing, you must complete a credit counseling course from a court-approved agency within 180 days of filing.

Benefits of Chapter 13 Bankruptcy

• Stops foreclosure and repossession by allowing you to catch up on missed payments.
• Protects assets from liquidation.
• Consolidates debts into one affordable monthly payment.
• Provides legal protection from creditors and collection actions.

If you are struggling with debt but want to keep your assets, Chapter 13 bankruptcy may be the right solution for you. At Juan C. Velasco, Esq., we provide personalized legal assistance to help New Jersey residents navigate the bankruptcy process and regain financial stability.