Chapter 13 Eligibility in Newark

Basic Requirements

Chapter 13 is available to individuals with regular income under 11 U.S.C. section 109(e):

Regular income: Wages, self-employment, Social Security, pension, or regular family contributions
Debt limits: Total noncontingent, liquidated debts must not exceed $2,750,000 (combined secured and unsecured)
Credit counseling: Required within 180 days before filing
Tax returns: Filed for the 4 prior years
No prior discharge restrictions: Check the 1328(f) screener

Income and Plan Length

Below New Jersey median ($68,047 for 1 person): Plan can be 3 to 5 years
Above median: Plan must be 5 years (60 months)

All projected disposable income must go to the plan. You must also pay at least as much as unsecured creditors would receive in a hypothetical Chapter 7 liquidation.

Who Should Consider Chapter 13?

Good Candidates

Homeowners behind on mortgage payments
People with non-exempt property (equity above $27,900 (federal) homestead, $4,450 (federal) vehicle)
Filers who do not pass the Chapter 7 means test
Those with a Chapter 7 discharge within the past 8 years
Co-signers wanting to protect co-debtors (section 1301 stay)

Potential Challenges

3-5 year commitment to monthly payments
High dismissal rates nationally
Must report income changes to the trustee
Cannot take on new debt without court approval
If income drops, maintaining payments can become impossible

New Jersey Considerations

Exemptions: New Jersey does not have its own bankruptcy exemptions -- filers must use the federal exemption system under 11 U.S.C. section 522(d). In Chapter 13, exemptions affect the minimum amount paid to unsecured creditors.
Foreclosure: New Jersey uses judicial, typically taking 12-18 months (the slowest in the United States). Chapter 13 can stop foreclosure and cure arrears.
Court location: 50 Walnut St., Newark, NJ 07102.

Frequently Asked Questions

What is the debt limit for Chapter 13?

As of 2024, the combined limit is $2,750,000 for all noncontingent, liquidated debts. If debts exceed this, Chapter 11 may be an option.

Is there an income limit?

No maximum. Your income determines plan length -- above the New Jersey median ($68,047) requires 5 years.

Can I keep my house in Chapter 13?

Yes. Chapter 13 is often filed specifically to save a home from foreclosure by curing arrears through the plan.

How much will my payments be?

Based on your disposable income (income minus allowable expenses), subject to the best-interest test. Varies significantly.

What if I cannot make payments?

Options include plan modification, conversion to Chapter 7, hardship discharge, or voluntary dismissal.