Legal Question in Bankruptcy in New Jersey

Re: what is chapter 13

Chapters 7 and 13 are different chapters under the US Bankruptcy Code. A Chapter 7 bankruptcy case is, in essence, a liquidation proceeding whereby a trustee is charged with liquidating for the benefit of creditors all assets of the individual debtor (or joint debtors) or the non-individual debtor that are not liened or subject to claimed statutory exemptions. In a Chapter 7 case involving individuals, the debtors seek from the court a discharge of most or all of their scheduled debt, and thus a "fresh start".

A Chapter 13 proceeding is available only for individuals (including those trading as businesses). In essence, the Chapter 13 debtor (or joint debtors) seeks to have the court approve (or confirm) a plan whereby a portion of the scheduled indebtedness may be repaid over a period of time of up to 60 months through the offices of a standing Chapter 13 trustee. Upon consummation of the court-approved plan, the remainder of the discharageable debt may be discharged. Often times, a Chapter 13 bankruptcy is employed for the purpose of reinstaing a note and corresponding home mortgage that may be delinquent.

There are a number of specifics that distinguish these two forms of bankruptcy from one another, and so I urge you to seek the advice of a bankruptcy attorney who can comprehensively advise and counsel you.