Bankruptcy represents a chance for debtors to start over. It’s an important tool that individuals and businesses can use when they are underwater and unsure of how to get back to solvency. People in New Jersey who are considering bankruptcy should be aware that there have been recent legal changes to the way Chapter 13 bankruptcy works in the U.S.
Changes to the law
Under Chapter 13 bankruptcy, people who are employed and have income work to pay down their debts. Filers compile a plan showing how they will pay their creditors, either partially or in full. The changes to the bankruptcy code went into effect in December of 2020 and will be in effect only until December of 2021. The new provision in the code is designed to help people who have been affected by illness or job loss. Section § 1328(i)(1) allows people to discharge some mortgage-related debt. Discharged debts do not have to be paid back.
In order to take advantage of this provision, people must be able to show that their financial hardship is directly related to illness or job loss in 2020 or 2021. If you find yourself in this situation and want to file for bankruptcy, it’s important to contact an experienced attorney for help because bankruptcy is a complicated process.
Help filing for bankruptcy
A lawyer who works in bankruptcy court may be able to help you understand if Chapter 13 bankruptcy is your best option. They might also be able to give you insightful advice about whether the new provision will apply to you.