What Are the New Jersey Chapter 13 Bankruptcy Laws for Selling a Home?
Chapter 13 Qualifications
- To qualify for Chapter 13 reorganization in New Jersey, one must show steady income and more than $1 million in assets secured by collateral, which includes real estate holdings, and no more than $337,000 in unsecured debts. The payment plan approved by a federal court covers mortgages, tax collections, back child support payments and payoff of student loans.
- Chapter 13 does not mean the loss of a home if the ability to continue monthly mortgage payments can be shown, even if there is more than one mortgage. A certain percentage of equity must be held by the homeowner. Creditors may claim a "security interest'' in the property, however, meaning they have a right to collect against the home if it goes into foreclosure while in bankruptcy.
Sale of Home
- Sale of a home requires approval by the bankruptcy trustee and the federal court. The court may claim proceeds of the sale to pay off other creditors. The property also may be refinanced to pay off the Chapter 13 plan. The court decides if the seller has a right to any of the proceeds from the sale.