New Jersey Bankruptcy Blog

Auto Financing in a Chapter 13 Bankruptcy
Sometimes in a chapter 13, the debtor’s lease expires or the individual needs to purchase an automobile. In general, it is possible to obtain a lease or financing if the debtors meet the criteria. However, the criteria may be different depending on the trustee for the bankruptcy case.
A debtor that wishes to purchase an auto or enter into an auto lease must first obtain a copy of the unsigned sales or lease contract and/or financing agreement from the dealership. All of the important terms and figures must be reflected on the unsigned contracts. Thereafter, the debtor must complete an “Application for Vehicle Financing During Chapter 13 Pan”. All of the unsigned contracts and the completed application must be submitted to the trustee for his/her evaluation and determination. If the trustee approves the application, the trustee’s office provides a letter or notice of “No Opposition” and consent to the dealership.
In general, obtaining a lease or purchasing an auto during a chapter 13 plan may be difficult, but it is possible based on the debtor’s financial situation and the seller involved. The consent of the trustee depends on the debtors’ financial position and the monthly trustee payments. Typically, a trustee will not consent to a lease or financing that requires a payment in excess of $350.00 monthly. Also, the debtor must show an ability to pay the monthly finance payments, in addition to his necessary expenses and trustee payment.
Robert Manchel, a NJ Bankruptcy Attorney,  will explain the process of obtaining a lease or auto financing in a chapter 13 case, by contacting him at 1 (866) 503-5655.

A person cannot file a second chapter 7 case less than 8 years after the filing of a prior chapter 7. However, a person can file a chapter 13 case 4 years after the filing of a chapter 7 case.
This means if a person incurred additional credit card debt after the filing of a chapter 7 case, a person may be able to eliminate a portion or all of their additional credit card debt through a subsequent chapter 13 case.
A chapter 13 debtor must pay all of their monthly disposable income to a chapter 13 trustee for 36 to 60 months, depending on their circumstances. If the debtor is paying certain debt, such as mortgage arrears or an income tax liability through a bankruptcy plan, and there is no additional disposable income to pay any funds toward the credit card debt, the debtor may eliminate all of the additional credit card debt.
In the event that there is disposable monthly income to pay the additional credit card debt through the bankruptcy plan, the debtor need only pay the disposable income toward such debt, thereby eliminating the balance of the debt.
Please note that there are many exceptions to the above information.
New Jersey bankruptcy lawyer Robert Manchel may be reached at 1 (866) 503-5655 to answer any questions that you may have about filing for bankruptcy protection.

Your monthly payments in a chapter 13 are based on numerous criteria. A debtor must pay all of their monthly household disposable income through a chapter 13 plan or trustee payment, under virtually all circumstances.  Certain debt, such as priority (certain taxes) and secured debt (mortgage arrears) must be paid through the monthly plan, in virtually all circumstances. If the debtor does not have sufficient monthly disposable income to make the required payment to creditors that must be paid, the case will be dismissed or thrown out. In other words, in a particular case, if the debtor does not have the sufficient disposable income to pay to the trustee each month, for such creditors, the case will be dismissed.
At the commencement of the case, the trustee confirms that the debtor has sufficient disposable income to make the required monthly payments. At the Confirmation Hearing, the amount of the monthly payment will be confirmed, and possibly modified, at an amount that pays all disposable income to pay all creditors who are required payment under the bankruptcy code. If the debtor earns more than the amount needed to pay certain creditors who are required payment under the code, the debtor must pay all of their disposable income, with the balance of the monthly disposable income to be paid towards the unsecured debt (ie. credit card debt), pro rata.
After the Confirmation Hearing, the debtor must continue to make the monthly trustee payments until the case is completed. However, if the debtor has an increase in disposable income, the debtor is required to pay the additional disposable income to the trustee. If the debtor’s  income is reduced, the debtor may not be able to reduce their monthly payment, in the event that the disposable income is insufficient to pay the creditors who are required payment under the plan. However, the monthly trustee payment may be reduced by the amount that was being paid to the unsecured creditors, solely due to having excessive disposable income.
Chapter 13 bankruptcy attorney Robert Manchel may be contacted at 1 (866) 503-5655 for a free consultation.

In a chapter 13, a debtor may be able to cramdown the financing on personal property other than an automobile if the property was purchased by financing more than one year prior to the bankruptcy filing. This issue typically relates to financing on furniture. However, this code section generally deals with any personal property other than an auto.
If a person purchases furniture by way of financing, he may keep the furniture by paying through the bankruptcy plan. They will have to pay the retail fair market value of the used furniture as of the time of the of the bankruptcy filing, plus an interest rate that is based on the present prime rate.
Example:
Fair Market Value of Furniture                                             $1,500
Total financing balance as of the filing date                     $2,800
A debtor will be permitted to keep the furniture, by paying $1,500, plus the fair rate of interest, through chapter 13 bankruptcy plan. The present permitted interest rate is about 5.25%.
However, if the debtor purchased the furniture, through financing, within one year of the bankruptcy filing, the debtor will be required to pay the following, if they wish and are able to keep the furniture:

1. The arrears through the bankruptcy plan, in addition to making direct monthly payments to the finance company; or,
2. pay the entire balance due, plus the contract rate of interest, through the bankruptcy plain.

Please note that a chapter 13 trustee may not permit a person to make a substantial payment towards a luxury item, such as expensive furniture and reduce the monthly disposable income that would otherwise be paid to their unsecured creditors.
Robert Manchel, a bankruptcy attorney serving NJ, can be reached at 1 (866) 503-5655 if you would like to discuss how a chapter 13 bankruptcy might be able to benefit you.

The chapter 7 process takes about 4 months until the discharge is entered and the case is completed. After the discharge, the debt that is dischargeable is eliminated and the debt that is not discharged is still due and owed by the debtor. Any debt A chapter 11 U.S.C., section 523 of the bankruptcy code provides a list of the type of debt that is not eliminated (discharged).