Experiencing financial distress to the point of being harassed by your creditors is a very
embarrassing and isolating experience. How can you admit to yourself and others that a bad
situation such as a divorce, or loss of employment has gotten even worse, with the potential of
law suits flooding your mailbox ?

Only an experienced Bankruptcy attorney can really understand you problems. No one wants
to admit that they are having these types of problems. However, there are times when the filing
of case in Bankruptcy is the absolutely right and correct action to take. Once you enforce your
legal rights, you can overcome the obstacles that are in your path and get back to living the life
you want and achieve your goals.

Why sometimes filing a Bankruptcy Case is the only real option.

Chapter-7-Bankruptcy-The-TruthI recently had a client who really did not want to file a case in Bankruptcy. Who could blame her? It is not something to be¬†undertaken lightly. She felt like a “loser” and was very disappointed in herself. But, over a period of years, prior to our meeting, she made many decisions in her financial life that lead her to this place. When she had the opportunity to peel away the sad feelings, she realized that her current financial position was unsustainable and that debt relief was her only realistic option. Ultimately, when she came to understand that what a “fresh start” would mean to her, she felt much better and decided to file her case. A person is insolvent when they can not pay their debts as they come due. So long as those debts were incurred in good faith, they are generally discharged in Bankruptcy. Notable exceptions: 1) child support and alimony, 2) taxes less than three years old and 3) student loans.

When you find yourself in this positon, it is always best to seek legal advise early. You may call me at 732-228-7400.

When is it time to call a Bankruptcy lawyer?

chapter 11 bankruptcyNo one ever wants to make that first call to a lawyer of any kind, and calling the Bankruptcy lawyer is probably the worst of all. Be assured that when you speak to me, I bring with me over twenty years of experience in dealing with the stresses that are caused by financial difficulty.

So, here are some guidelines on when to call for legal advise:

1) You are using your credit cards to buy everyday purchases, such as food and gas and you don’t pay them off every month.

2) You have already spent any savings or taken a pension loan to pay creditors and you have still have a problem with collection activity.

3) You are behind on your credit payments are receiving harassing phone calls or are being sued.

I can help you through these tough times. The initial consultation in my office is always with out charge.

Please call today at 732-228-7400.

Chapter 13 Bankruptcy Protection

Chapter 13 bankruptcy protection is commonly referred to as “wage earners protection”. It is referred to in this way because this type of plan affords debtors who have a regular income the opportunity to workout a payment plan with their creditors. A good way to think of Chapter 13 protection is as a restructuring of your debts. Whereas chapter 7 is more black and white (your assets are liquidated to pay creditors), chapter 13 allows for the restructuring of debt and also provides a greater likelihood of saving your home from foreclosure and your vehicle from repossession. The payments plan that comes out of a chapter 13 bankruptcy will always be for a period of 3-5 years. A chapter 13 payment plan will never be more than 5 years in duration.

Another advantage of chapter 13 protection is that it will act like a debt consolidation loan during the payment period. The debtor will make one monthly payment to the bankruptcy trustee and the trustee will pay the appropriate amount to each creditor. This makes the process easy to manage for the debtor.

Eligibility requirements for chapter 7 bankruptcies

The biggest qualification is related to the income of the debtor. If the debtor’s income is higher than the state median then a “means test” will be applied to see if the chapter 7 is feasible. This “means test” will look at the debtor’s gross monthly income over a 5 year period. If this monthly income is more than $10,950 or 25% of the debtor’s unsecured debt then the individual will not be eligible.

Aside from meeting the income requirements, a potential chapter 7 bankruptcy applicant must prove that he or she has received credit counseling from an approved agency within the last 180 days.

Chapter 7 bankruptcy is unique because of the liquidation of non-exempt assets and the relative speed at which these cases can be handled vs. other types of bankruptcy protection.

Chapter 7 bankruptcy protection

Chapter 7 bankruptcy can also be referred to as a “liquidation plan” because a debtor’s non exempt assets will be liquidated by the bankruptcy trustee in order to raise cash to payoff creditors (we will talk about exempt and non exempt assets in a bit). Chapter 7 bankruptcy is used to discharge most types of unsecured debts such as credit cards, medical bills and personal loans. Certain types of debts, such as federal or state taxes and student loans may not be discharged. Once the bankruptcy petition is filed and your creditors are informed, you will enter into the “automatic stay” period. This is a temporary period of time in which your creditors must stop all action against you – including foreclosure, collection calls, shut off of utility services and more. However, the automatic stay is temporary and eventually your creditors will resume action against you unless they are paid or an agreement is reached.

Exempt vs. Non-exempt assets. Examples of exempt assets are your primary residence and your primary vehicle. Non-exempt assets could be virtually everything else – including investments, real estate and other property. In a chapter 7 bankruptcy, your non exempt assets will be sold in order to payoff your creditors. You will not get anything from the sale of these items.

What happens to your primary residence and your primary vehicle? Since the debts associated with these types of property are secured debts, the creditor has the right to foreclose on the home and repossess the automobile in the case of non-payment. If the debtor does not wish to keep the home or the car they can choose to simply walk away from these pieces of property and allow the bank to take possession. If the debtor does wish to keep possession of the home or car then they will need to work with the creditor to reaffirm the debt. This point is a little confusing but think of it this way – the chapter 7 bankruptcy discharges your responsibility to pay back all of your debts – but in the case of your home and your car (if you wish to keep them) you will need to reaffirm or take on those debts again. You, or more likely your attorney, will negotiate with the creditor to come up with terms for the reaffirmed debt that satisfy both parties.

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