One key issue in a New Jersey Chapter 13 bankruptcy is how much the monthly payment will be and how long the plan has to last.
Unfortunately, the answer is not the same for everybody. It can depend on several factors, and each has to be looked at in turn.
How Much CAN You Pay?
The first determination is how much disposable income (DI) you have available for payments. Simply put, it is how much money is left over from your net monthly income after all regular monthly expenses are paid.
The actual calculation is a bit more involved than that, but you can find out more information here about how DI is determined.
How Much Do You NEED to Pay?
The second is how much money you must pay through your plan. There are certain debts that must be paid in full for practical or legal reasons, and they can include:
- Arrears on a Mortgage
- Arrears on Alimony, child support or other DSO
How Much Do You HAVE to Pay?
Third, the bankruptcy code can create a "floor" or minimum amount that must be paid to creditors based on the "unexempt value of assets." The law provides protection for your assets in a bankruptcy through "exemptions." However, not all of these are unlimited.
If the value of something you own exceeds its exemption, then the bankruptcy code can require you to pay that extra amount to creditors through your plan. Means testing as well can also create a minimum payment that must be made to unsecured creditors. So as you can see, determining your plan payment can be involved.
So What Do I Do?
So if you live in southern New Jersey, are considering filing a chapter 13 bankruptcy, and are concerned about whether you can afford the plan payments, please feel free to call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.
If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.