NEW JERSEY BANKRUPTCY
WHAT IS BANKRUPTCY AND HOW CAN IT HELP YOU?
What is bankruptcy?
Bankruptcy is a process. It a legal system a person or business that is unable to repay their debts starts so they can legally modify the debt they owe through the bankruptcy court system.
What are the different types of bankruptcy? Which will work for me?
There is more than one sort of bankruptcy, and which one will “work” for you depends on what the goal is. Is it to hold onto a house or car? To stop wage garnishment? To pay back taxes?
Chapter 7 refers to the chapter of the Bankruptcy Code providing for liquidation - the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors. The court will evaluate the debtor's income and expenses to determine if the debtor may proceed under Chapter 7. What is and is not exempt is written out in the bankruptcy code, and you will want to know want is exempt or not before you file any sort of bankruptcy.
Chapter 11 bankruptcy involves the reorganization of a corporation or partnership. A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time, meaning the business will change the repayment agreements to a schedule the business can pay, rather than the original agreement.
Chapter 12 refers to the chapter of the Bankruptcy Code providing for adjustment of debts of a "family farmer." IT let the farmer pay the debts according to a plan, rather than the original agreement.
Chapter 13 provides for the adjustment of debts of an individual with regular income, and income is whatever money the debt gets regularly, not just wages.. Chapter 13 allows a debtor to keep property and income to pay debts over time, usually three to five years.
How long will bankruptcy stay on my credit report?
A Chapter 7 bankruptcy (liquidation of debts) will generally stay on your credit report for 10 years.
A Chapter 13 bankruptcy (wage-earner plan) will generally stay on your credit report for 7 years from the date of filing.
What property is included in bankruptcy?
When you file Chapter 7 bankruptcy, it typically includes liquidation of all nonexempt assets. Vehicles, work-related tools and household furnishings may be considered exempt, but your other property may be considered nonexempt, and can be turned over to your creditors or sold by a trustee.
If you file Chapter 13, you usually are able to keep f your assets, as long as you maintain steady income and continue to make your agreed-upon payments.
What debts can't be included in bankruptcy?
Some debts are not dischargeable in bankruptcy, including most student loan debt, back taxes less than three years old, alimony, child support, and debts incurred through fraud. But this is a general statement, and each situation is different, so don’t assume a debt cant be discharged just because it's in the list.
How will bankruptcy impact by spouse or cosigner?
While you can certainly file bankruptcy as an individual, if you are married and both of you have significant debt, you may consider filing a joint petition for bankruptcy.
If you file separately, only your own debts will be discharged. Therefore, if your spouse has debt that isn't in your name, those will not be impacted. For joint accounts, your debt may be discharged, but the lender can still try to collect from your spouse.
The same is true for a cosigner. If you had a family member or friend cosign on a loan for you, even if the loan is discharged for you, it will not be discharged for your cosigner. The lender will require your cosigner to pay the entire remaining balance of the debt.
What's pre-filing bankruptcy counseling?
Getting a bankruptcy counseling certificate is required to file for personal bankruptcy. It can be gotten online or over the phone after participating in the counseling, also online or on the phone. This is a link to a counseling agency that isn’t very expensive. https://www.debtorcc.org/
Discharge: May occur during Chapter 7 bankruptcy proceedings; means that you no longer owe any money on that debt.
Exempt assets: Items that are not included in your bankruptcy filing.
Liquidation: When your assets are sold and the proceeds used to pay your debts.
Means test: A test that uses certain parameters to determine whether a debtor may file Chapter 7 bankruptcy for a full discharge of debt. Individuals with too much income after certain expenses are prohibited from filing Chapter 7 unless they qualify as an exception.
Nonexempt assets: Items that are included in your bankruptcy filing, which may be repossessed and liquidated
Reaffirmation: When you agree to new terms with your lenders during the bankruptcy process and do not seek to discharge your debt or cease your access to credit.
Secured debt: Debt represented by collateral, such as an automobile or home. Secured creditors have the right to your collateral in the event you default on payments. Typically, secured debt is not fully discharged in bankruptcy and secured creditors are entitled to certain privileges
Unsecured debt: Debt, such as credit card debt, that is not secured with collateral. During the bankruptcy process, creditors of unsecured debt are not able to repossess your personal property.