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Are You Thinking About Filing For Bankruptcy Protection?
By Tony Merlino, Fri Dec 9th
Bankruptcy Overview Bankruptcy, when you come right down to it, is the process thatenables those who are unable to pay their debts get a freshstart. It allows for some or all of these debts to be dischargedor reorganized. Individuals or businesses may file bankruptcy. This enables you to clean the slate and get a 2nd chance withyour finances. In most instances, provides a fairmethod for compensating your creditors as well.
The process need not be your worst nightmare.However, there are certain requirements that must be met. Youwill be required to file a list of all of your outstanding debtsand a complete list of your assets. This is done with the helpof your lawyer thru the Federal Courts. To make this process easier to understand, your "Assets" fallinto two categories. They are: Exempt and Non-Exempt Exempt assets are the property or belongings that you do NOThave to use to pay off the debts you have incurred. In other words, exempt assets are off the table, (not in play)and may not be touched by your creditors. In most instances thisincludes a certain amount of equity in your home, and some ofthe equity in a vehicle. For the most part, your clothing, andother personal items are deemed exempt. This does not includethe expensive jewelry, furs and the big boys toys. Next, you will be assigned a "trustee" by the Federal BankruptcyCourt to administer the payment of your debts. Your debts alsofall into two categories. They are: Secured debts and Unsecureddebts. A Secured debt is one in which the creditor retains a "securityinterest." Most often it is the same property that was purchasedwith the credit that creditor extended. Secured debts occupy thefirst position. This means they enjoy priority over non-secureddebts, and must be satisfied first. If you are unable to pay off secured debts, the creditor has theoption to repossess that property and sell it. If there is any"short fall", that remaining debt is now considered unsecured.It doesn't go away, it has only changed from secured tounsecured. Once you have filed for protection, the court will issue an"automatic stay". This stops your creditors in their tracks.They may not take additional action against you beyond thebankruptcy. This allows you to avert impending repossessions andforeclosures. Chapter 7 In Chapter 7 you are in fact liquidating your assets.This means that you are only permitted to keep "exempt"property. The remaining non-exempt property will be sold to thehighest bidder. The proceeds of the sale are applied to theoutstanding debt. The shortfall or amount left unpaid by thesale is then discharged. In Chapter 7 there are a few debts that are notdischargeable. They include taxes, back child support, DWI finesand student loans. Chapter 13 In Chapter 13 you are trying to regroup, recoup andget back on track. It is commonly known as the "reorganizationbankruptcy for individuals." Individuals who want to pay off their debt over a period ofthree to five years file Chapter 13 bankruptcy. Chapter 11 Chapter 11 is commonly used as the reorganizationtool for businesses. This kind of is attractive ifyou own "non-exempt" property that you want to protect. Chapter11 will also help you to catch up on bills that have fallen intoarrears. It effectively blocks an impending repossession orforeclosure. Not everyone is eligible for a Chapter 13 bankruptcy. You musthave a reliable source of income that is sufficient to pay yourreasonable everyday expenses and still have an amount
ofpositive cash flow with which you begin paying off past duebills. If you file a Chapter 13 you are required to submit a plan torepay your debts that includes a set timeframe and set amountsto be repaid. Upon approval of the court, bothparties (debtors & creditors) are obliged to accept the terms ofthe order What To Do Now Choosing your lawyer is an important decision. This beginning process allows you to evaluate and determine yourbest course of action. This discussion is also your opportunityto satisfy yourself that the Jersey Justice sponsoringattorney's fees are reasonable for your type of case. Am I Making The Right Decision? In all likelihood you are stressed and feeling the pressure toseek professional help with your finances. Your decision to lookfor an experienced attorney may be the best financialdecision you have made in a long time. Even taking the beginning steps to consult with an attorneytakes enormous courage. You may even be thinking aboutstruggling through all the mess on your own. That could be avery lonely path. Before you make the decision to go it alone, ask yourself a fewquestions. If two or more of these are you, then it could be theperfect time to seek the services of a professional. Are You: receiving harassing or threatening phone calls from people youowe? paying the minimum payment possible on your credit cards? taking out Payday Loans? (which by the way are illegal in NJ) begging for loans from friends and family? about to lose your job? behind in your taxes? receiving foreclosure notices? behind in child support or alimony? gambling to try and make ends meet? sick and unable to even go to work? If your answers indicate that you are in financial deep water,bankruptcy may be your best solution, but you will never knowfor sure until you get the advice of an attorney. How Will Effect My Life? Your Attorneywill be able to explain some other very importantconsiderations. What happens after bankruptcy? What will my life be like? Will I ever be able to get credit again? How do I live within a budget? How do I start all over? How do I rebuild my credit? If these nagging questions are on your mind, then a bankruptcyattorney is right for you. It is true. A can be a persistent source of blemisheson your credit report for up to 10 years. The good news is youare able to start re-establishing your credit the moment yourcase is closed. How good is your present report? It is probably alreadysuffering the consequences of late payments, delinquencies andevery other known credit report disorder. Think about this. Your credit score could actually improve dueto the elimination of most of your debt. Lenders actuallybelieve that you are a better credit risk now since they knowthat you may not file again for another six years. At about 18 months to 24 months into your you willeven be able to qualify for a new home loan if you are able tocome up with a minimum down payment backed up with proof ofincome that supports the debt service. Auto loans are available to individuals upon discharge of yourexisting debt. And believe it or not you will start receivingoffers for credit almost immediately. But "caution" is thewatchword at this critical point in time. The offers of credit could have been what got you into troublein the first place. About the author:Tony Merlino is webmaster and legal marketing consultant athttp://www.JerseyJustice.com ,a legal information and marketingportal for clients and their lawyers in New Jersey.
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