Chapter 7 Bankruptcy Explained

By Leading Chapter 7 Bankruptcy Attorneys in New Jersey

Top bankruptcy lawyer in New Jersey for Chapter 7 bankruptcy filings on behalf of residents in and around Monmouth County, Middlesex County and across NJIt is common for individuals to feel overwhelmed by mortgages, household bills, car loans and credit card debt. When a person has this coupled with an unexpected job loss or medical crisis, debt can spiral out of control, putting an entire family at risk. If this sounds familiar, talk to a NJ bankruptcy lawyer to get advice and find out your options.

In some cases, filing for Chapter 7 bankruptcy may be the answer to your debt problems, which we explain below. However, in other cases a Chapter 13 bankruptcy or other forms of non-bankruptcy debt relief might be the solution. Learn about all your options in a free, no obligation consultation with Garland & Mason, L.L.C.

How Does Bankruptcy Work Under Chapter 7?

Chapter 7 bankruptcy involves the liquidation of a debtor’s nonexempt assets to satisfy debts owed to creditors. Certain property is exempt from bankruptcy liquidation. We recommend talking to a bankruptcy lawyer to help you identify and maximize your exempt assets and to advise you of the potential risk of losing non-exempt assets.

Bankruptcy exemptions keep your assets safe from liquidation and creditors cannot use these assets to satisfy their claims. At the conclusion of a Chapter 7 proceeding, the debtor receives a discharge effectively and forever eliminating all eligible debt. Bankruptcy lawyer Gary L. Mason will help you determine if you are eligible for Chapter 7 bankruptcy.

What are the Advantages of Bankruptcy in Chapter 7?

There are many advantages of filing Chapter 7. Filers will get the immediate advantage of having the automatic stay in place the moment you file the bankruptcy petition. The automatic stay tells creditors to “stay away,” which includes an end to threatening letters and telephone calls. The automatic stay will also stop foreclosure, allowing time for the debtor and the attorney to decide what is best moving forward.

A major advantage of Chapter 7 bankruptcy is that within four to six months, the bankruptcy court will likely discharge most unsecured consumer debt, including credit card debt, unsecured lines of credit and medical expenses. Even if you cannot have all debt discharged, having the unsecured debt removed frees up income and allows for an easier time paying bills going forward.

Another advantage of Chapter 7 bankruptcy is that it puts an end to a downward debt spiral. While there are concerns about rebuilding credit scores after bankruptcy, the reality is a person’s credit score before bankruptcy had little chance of improvement. Only by filing Chapter 7 bankruptcy can some people hope to improve their credit score over time.

Am I Eligible to File for New Jersey Chapter 7 Bankruptcy?

After October 2005, eligibility requirements changed for Chapter 7 bankruptcy. Previously, anyone could file for Chapter 7 bankruptcy protection. However, the amended Bankruptcy Code now contains eligibility requirements based on median household income standards, known as the Chapter 7 means test. If a person’s household size and income is below the average for the state, the person can file Chapter 7. If the person does not fall below the average, the second part of the means test requires a complicated financial analysis based on disposable income and unsecured debt. For this reason, we strongly recommend you seek the guidance of an experienced Chapter 7 bankruptcy attorney.

Furthermore, just because a person may be eligible to file for Chapter 7 bankruptcy does not mean that is in that individual’s best interest. For instance, you may possess certain non-exempt assets, such as significant equity in your home that may be at risk in a Chapter 7 bankruptcy. Under those circumstances, you may be better served by filing a Chapter 13 petition.

Chapter 7 Bankruptcy Lawyers in New Jersey for Free Consultation

Bankruptcy is not the right solution for everyone, but the benefits of bankruptcy may make it the right one for you. For Chapter 7 bankruptcy information, contact our Manalapan law firm to schedule a free initial consultation with an experienced bankruptcy lawyer. Our bankruptcy lawyer can answer your questions and will help you find the right path to a fresh financial start.