New Jersey Bankruptcy Attorney
While declaring bankruptcy may be a solution for you, it is a serious matter and should not be done without you having to full knowledge of the effects it will have on you. There are positive benefits as well as some negative aspects which you should consider. Your New Jersey Bankruptcy Lawyer can enlighten you on the pros and cons of filing for bankruptcy.
Don't let important financial matters keep you up at night. It is better to take some action rather than suffer from stress and nightmares. You don't have to go it alone! Contact a contact a New Jersey Bankruptcy Attorney, who can assist you in making these important decisions regarding your economic dilemma.
Being a combination of both federal and state laws, the Bankruptcy Code can be confusing. The questions and answers listed below are intended to inform you about the basics of the Bankruptcy Code in New Jersey.
- What is Bankruptcy?
- It is the legal procedure for dealing with debt problems of individuals and businesses. It can provide a fresh start for people who simply cannot pay their bills.
- What is a Secured Debt?
- It is debt, back by a mortgage, pledge of collateral or other lien. The creditor has the right to pursue specific plans property upon default. Examples include home mortgages, auto loans and tax liens.
- What is an Unsecured Debt?
- It is a claim in which the creditor holds no special assurance of payment. It is a debt for which credit was extended based solely upon the creditor's assessment of the debtor's ability to pay. Usually credit cards fall under this category. Be aware that store credit cards use to purchase commodities can be considered secured debt.
- What is a 341 meeting?
- Also called a "creditors' meeting", it is the meeting of creditors required by section 341 of the Bankruptcy Code. The debtor is questioned under oath by the creditors, a trustee, examiner, or the U.S. trustee about his/her financial affairs.
- What is a Statement of Financial Affairs?
- It is a series of questions the debtor must answer, in writing, concerning sources of income, transfers of property, lawsuits by creditors, etc. The information is completed on an official form.
- What the Differences between Chapter 7 and 13 Bankruptcy?
- Chapter 7, which is also called a Liquidation Bankruptcy, requires that a court appointed trustee sells off most of your assets to pay off your debts. In New Jersey certain items are considered exempt, to set dollar amounts. In order to keep nonexempt property, debtor must usually pay to the trustee the value of that property. Exempt, to its full value, are annuity proceeds (not counting lottery winnings), death benefits, disability benefits, life insurance cash values, alimony and child support, certain pensions, Social Security, Workmen's Compensation and Veterans Benefits.
If you are current on your payments for property that is secured by a loan, you may elect to keep the property by continuing to make payments on that loan. Any exemption limit is applied to the equity you have in that property.
In Chapter 13, which is entitled "Adjustment of Debts of in Individual with Regular Income", property is retained and the debt is paid over a 3 to 5 year period. You will be allowed, under your court approved plan, to utilize a portion of your disposable income for living expenses. Luxury items like vacations, cruises and spa visits will not be allowed. You keep your property as long as you are current with your payments as well as making any past-due payments. If you fall in arrears those items may be liquidated.
- What are the Requirements for Chapter 7?
- Your current monthly income (over the last six months) must be less than the median income for a New Jersey family of your size. If the debtor's current monthly income is more than the state median, the Bankruptcy Code will require the application of a "means test". This test evaluates the debtor's aggregate current monthly income over five years, certain statutory allowed expenses and the debtor's non-proprietary unsecured debt to see if there was a presumption of abuse. If they so rule, the case will be generally converted to a Chapter 13.
- Will My Credit be Affected Bankruptcy?
- A bankruptcy filing will take about seven years to be taken off your credit reports. While it won't stop you from getting a loan all financing, more than likely you will be charged a higher interest rate.
- How is my Current Monthly Income Calculated?
- It is an average of your last six months of total income prior to filing. Social Security payments or any payments you might receive as a victim of war crimes (rare) are not included. The timing of your filing can be important especially if you have lost your job. Waiting a month or two to reduce the calculation of your average could make the difference in meeting the means test.
- Will the Alimony Payments, I make each Month, be Erased by Bankruptcy?
- Any domestic support payments, including alimony and child support, taxes, DUI related debts and any debts you acquired in bad faith in anticipation of bankruptcy are not erased.
- Is it Necessary to List All My Creditors?
- Yes, you must list all of your creditors. This includes your car loan and house mortgage. The credit schedules will have to be signed. You do so under penalties of perjury, so be complete.
- I cosigned for a loan for relatives automobile. Do I have to list it?
- You must list it if you are on the vehicle's documentation.
- I have a Large Outstanding Student Loan to Pay. What are My Options?
- Student Loans are almost impossible to discharge in a Bankruptcy. It must be demonstrated that the repayment of this loan will inflict a severe hardship on you and your dependents. The courts use a number of tests, most of which are difficult to meet. There are repayment options which can forgive the balance remaining after 20 years of payments based on 15% of your income.
- I File for Bankruptcy in the Past, can I File again?
- Yes you can, if it has been more than eight years since a Chapter 7 filing or in the case of a Chapter 13 it has to be more than six years.
- My Bankruptcy is a Result of my Business and I Probably won't meet the Income Requirements, can I still File for Bankruptcy?
- If your debts are primarily from running a busines you can file under Chapter 7 without meeting the income requirements. The same provision applies to disabled veterans whose debts were accumulated while they were on active duty.
- Do I Need an Attorney to File for Bankruptcy?
- The Bankruptcy Code is extremely complex, and in fact, many attorneys do not handle bankruptcies because the learning curve is so steep. Yes, you can not obtain the services of a "Petition Preparer", but they nor any court official can legally give you advice. It is generally more cost-effective to retain a New Jersey Bankruptcy Attorney. This is one case where the adage of "you get what you pay for" is very appropriate.
- There are TV Commercials which Claim they can Eliminate most of my IRS Back Taxes. Is this possible?
- These TV ad claims are tremendously overstated. Offers in Compromise are very seldom accepted by the IRS. It has been estimated that less than 20% are accepted. You have to demonstrate to them that your debt to them could NEVER be paid. It is more likely that the IRS will agree to you paying the entire balance of your back taxes in installments, and will probably include interest and penalties.
- What is a Reaffirmation Agreement?
- It is an agreement which allows you to keep a particular piece of property even after going through bankruptcy. It's a new contract agreed by you and the lender in which you were firm that you are still liable for the debt. You should consult a New Jersey Bankruptcy Attorney before entering such an agreement with any lender.
- When will my Creditors Stop Calling?
- After filing for bankruptcy the Court will mail notices to all the listed creditors. This normally taking a couple of weeks. If you tell a creditor yourself that you have filed, he shoul stop calling you. If they continue to use their collection tactics once they are informed, they could be made liable for court sanctions as well as attorney fees for their conduct.