Most New Jersey residents file a chapter 13 bankruptcy repayment plan to get caught up on their mortgage and save their home from foreclosure. However, you can also file if you are behind on alimony, child support, or some other domestic support obligation (DSO).
If this sounds like you, you can propose a plan of repayment over three to five years. This prevents your (ex)spouse from bringing any nastiness to bear to collect, while allowing you the breathing room you need to get caught up.
Things to Bear In Mind
In doing this, you should bear in mind two things:
- DSOs get paid first. In 2005, Congress moved these debts to the top of the payment list. As a result, they are disbursed first before mortgage arrears (secured debt) or credit cards (unsecured debt). As such, it may be a three to five year plan, but the money is received by your (ex)spouse much sooner than that.
- DSOs must be kept current during the plan. In the past, people would file chapter 13 to pay a DSO arrearage, but then just get behind on current payments during the plan. Under the law now, however, you can be denied a discharge of all of your debts at the end of the plan if you are behind in payments without a darned good reason.
The advantage of the first point comes into play where circumstances change during your plan. Let’s say you have a five year plan, but because the DSO gets paid first, it gets brought current in the first 18 months.
Two years in, you lose your job and cannot make the plan payments anymore. Depending on the circumstances, you may be able to convert to a chapter 7, discharge your other debt, and get a fresh start sooner.
So What Do I Do?
So bankruptcy can definitely help you get current on these obligations. If you are behind on your alimony, child support, or other DSO, and you live in southern New Jersey, please call my office at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office.
If you have more questions about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey. For bankruptcy issues in divorce, there is Top Questions Divorcing Couples Ask About NJ Bankruptcy.