Frequently Asked Questions About Bankruptcy in New Jersey
At Garland & Mason, L.L.C., our bankruptcy attorney offers free initial consultations to address your questions or concerns about filing for bankruptcy in Middlesex County and the rest of New Jersey. Based on these consultations, we then put together some of the most common questions that our clients ask us. However, if your concern is not listed here, please contact us. We can then discuss whether you are a candidate for bankruptcy court protection and a fresh financial start.
Filing for Bankruptcy in NJ Frequently Asked Questions
Bankruptcy is a set of federal laws that provide immediate protection from creditor actions and forgiveness or partial forgiveness of debts. Our leading New Jersey bankruptcy attorney provides the following answers to common questions we receive from clients during their free case consultations about the bankruptcy process and more:
- What is Chapter 7 bankruptcy?
- What is Chapter 13 bankruptcy?
- Can my business declare bankruptcy?
- Are all debts discharged in bankruptcy?
- Can I discharge past due taxes?
- Do I have to be flat broke to file bankruptcy?
- Do I have to give up all my property?
- What assets are not exempt?
- Can bankruptcy stop foreclosure?
- Can bankruptcy stop repossession?
- Will bankruptcy stop debt collection or garnishment?
- What is bankruptcy credit counseling?
- Will bankruptcy ruin my credit rating?
What is Chapter 7 bankruptcy? For individuals or couples who qualify under the income criteria, Chapter 7 bankruptcy or “straight bankruptcy” cancels certain debts outright. It also liquidates certain assets to satisfy these debts.
What is Chapter 13 bankruptcy? For individuals who are not candidates for Chapter 7 discharge, Chapter 13 bankruptcy offers a reprieve from creditors and interest while you pay back part of your debts over time. You will set up a repayment plan.
Can my business declare bankruptcy? Yes. Small-business owners may opt to shut down the entity under Chapter 7 bankruptcy so that they are not personally liable for debts of the business. We can also explore your commercial bankruptcy options, depending on what you want to do with the business in the future.
Are all debts discharged in bankruptcy? No. Bankruptcy discharges unsecured debts such as credit card debt, medical bills, utility bills and judgments. It does not apply to secured debt (such as a mortgage) or certain obligations such as student loans, child support or criminal fines.
Can I discharge past due taxes? It depends on the facts of your case. Income tax arrears from at least three years back may be discharged, but recent income taxes, property taxes and other tax obligations cannot. But, we can determine if your taxes are eligible.
Do I have to be flat broke to file bankruptcy? No. The purpose of bankruptcy is to help you get out of debt before you lose everything. Furthermore, many hardworking people with decent incomes obtain debt relief through Chapter 7 or 13 bankruptcy.
Do I have to give up all my property? In Chapter 7 bankruptcy, you must forfeit some assets to pay creditors. However, bankruptcy exemptions protect most assets, including retirement savings, equity in your home or vehicle, and personal possessions. Most clients keep all of their assets.
What assets are not exempt? In a Chapter 7 bankruptcy, you may not be able to keep a boat, a second home, expensive jewelry or other luxuries. We can determine before you file bankruptcy which assets are covered.
Can bankruptcy stop foreclosure? Yes. If you can keep up with the current payments, then filing for Chapter 13 bankruptcy halts foreclosure proceedings. Then it allows you to pay the arrears over time.
Can bankruptcy stop repossession? Chapter 13 bankruptcy prevents repossession or may allow you to get your repossessed vehicle back. Chapter 13 can also reduce the remainder of your car payments to an affordable level.
Will bankruptcy stop debt collection or garnishment? On the day you file your bankruptcy petition, all creditor actions and creditor harassment must stop. This includes phone calls, lawsuits, liens and wage garnishment.
What is bankruptcy credit counseling? Before you can file your bankruptcy petition, you must prove you completed an approved credit counseling course. Before your debts are discharged, you must also complete a financial management course on budgeting and using credit. The classes are not expensive and take only a few hours. You can take the classes in person, by phone in addition to the Internet.
Will bankruptcy ruin my credit rating? Most people contemplating bankruptcy already have poor credit scores. However, bankruptcy does not blacklist you or prevent you from getting credit. Within a year or two, you can then qualify for credit cards, car loans and even home loans. In addition, any impact is short-lived — bankruptcy actually allows you to rebuild credit. See Life After Bankruptcy.
Manalapan New Jersey Lawyer for Consumer Bankruptcy
Attorney Gary Mason has practiced in consumer and small-business bankruptcy law for more than 20 years. The law firm of Garland & Mason, L.L.C., represents debtors in Monmouth County and surrounding counties of New Jersey. Arrange a free consultation today.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.