Chapter 13 Payments in Newark

Your Chapter 13 payment depends on income, expenses, debts, and assets. Here is how payments work in the District of New Jersey.

This page provides general educational information, not legal advice. Consult a qualified attorney for advice about your specific situation.

Depends on income, expenses, debts, and assets. Must cover priority debts in full plus your disposable income. Ranges from hundreds to thousands monthly.

How Payments Are Calculated

Your Chapter 13 payment must satisfy three tests:

  1. Disposable income test: All projected disposable income (income minus allowable expenses) goes to the plan
  2. Best interest of creditors: Unsecured creditors must receive at least as much as they would get in Chapter 7 liquidation
  3. Feasibility: Court must find you can actually make the payments

What Gets Paid Through the Plan

Must Be Paid in Full

  • Mortgage arrears (if keeping home)
  • Car loan arrears (if keeping car)
  • Priority tax debts
  • Domestic support obligations (arrears)
  • Administrative expenses (trustee/attorney fees)

Paid at a Percentage

  • General unsecured debt (credit cards, medical bills) - 0% to 100%
  • Stripped second mortgages
  • Deficiency claims on surrendered property
  • Remaining balance discharged at completion

Plan Length

  • Below New Jersey median ($68,047 for 1 person): 3 to 5 years
  • Above median: Must be 5 years (60 months)
  • Trustee fee is typically 5-10% of payments in the District of New Jersey

If You Cannot Make Payments

  • Plan modification: Ask the court to reduce payments
  • Payment suspension: Some courts allow temporary hardship pauses
  • Convert to Chapter 7: If you qualify
  • Hardship discharge: Available if you have paid a substantial portion (section 1328(b))
  • Voluntary dismissal: You lose protections but regain flexibility

Making Payments

  • First payment due within 30 days of filing - before plan confirmation
  • Most trustees require wage orders or electronic payments
  • Regular mortgage payments continue directly to lender
  • Trustee may require you to turn over tax refunds
  • Income increases must be reported to the trustee

Frequently Asked Questions

How much will my payment be?

Depends on income, expenses, debts, and assets. Must cover priority debts in full plus your disposable income. Ranges from hundreds to thousands monthly.

How long is a Chapter 13 plan?

3 to 5 years. Above the New Jersey median ($68,047) requires 5 years. Below-median filers can choose 3 years.

When does the first payment start?

Within 30 days of filing - before plan confirmation. Missing early payments jeopardizes your case.

Can payments be reduced?

Yes. File a motion to modify the plan if circumstances change (income decrease, new expenses).

What percentage of debt will I pay?

Priority debts: 100%. Unsecured debts: whatever your disposable income allows (sometimes 0-10%, sometimes much more).

Check Your Eligibility

Use our free screener to check if prior filings affect your eligibility for a new bankruptcy discharge.

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