On this website, we’ve answered hundreds of the common, and not so common, questions that we’ve been asked over the years about debt, bankruptcy, home foreclosure and how to get your life back.
To find the answer to a question you have, you can click on the category to the right that matches, or you type your question into the search box, found further down the page on the right.
What Happens When You File for Bankruptcy in New Jersey
What is Bankruptcy?
Bankruptcy laws are federal laws. The bankruptcy laws are located in a federal law book that is called the bankruptcy code. Bankruptcy courts are part of the federal court system, which is separate from the state courts. In New Jersey, there is one bankruptcy court in Trenton, Camden and Newark. The bankruptcy courts are located in the federal court buildings, where all federal cases are handled.
Federal bankruptcy laws are granted power over all state courts. Therefore, if a debtor who files for bankruptcy protection in New Jersey owns real estate in three separate states, the bankruptcy court has control of the property in all states. Sometimes a bankruptcy court will temporarily send a dispute back to the state court for the resolution of an issue, such as child support payments.
In general, bankruptcy deals with personal and business debt, in addition to controlling the actions of creditors regarding the debt. For example, bankruptcy may allow a debtor to avoid eviction because of the nonpayment of debt, but not as a result of playing load music.
How Can Bankruptcy Help Me? (Why File)
Bankruptcy can help a person with the following: permanently eliminate debt; avoid utility shut off; save house from foreclosure; save an auto from repossession; stop residential eviction actions; eliminate all or partial tax debt; ease support or alimony payments; stop debt collection; possibly stop any action that is a result of having not paid a debt; stop a creditor from taking property; immediately stop a creditor from suing someone.
Someone that files for bankruptcy protection is called a debtor. Typically, a debtor will file a chapter 7 case for the purpose of eliminating all unsecured debt, such as credit card debt or personal loans.
Chapter 13 cases are typically filed for the following reasons: save a house from foreclosure; save a car from repossession; eliminate most unsecured debt because the debtor did not meet the chapter 7 criteria. The portion of the unsecured debt that is not paid, is eliminated in a chapter 13.
Typically, a person will file for chapter 11 bankruptcy protection for the same reasons as a chapter 13. However, the person does not meet the chapter 13 criteria because the amount of debt is substantial. Also, a corporation or limited liability company must file a chapter 11 case to reorganize, as they are unable to file a chapter 13. Chapter 11 cases also help businesses with financial issues, continue to operate.
All bankruptcy chapters deal with all of the debtor’s debts and creditors and not just the one debt or creditor that is their major concern. For example, someone may want to file for the sole purpose of avoiding auto repossession, due to payment arrears. However, the bankruptcy laws apply to all of the person’s debt and creditors and not only the auto finance issues.
A person named a trustee is appointed to administer each case. The responsibilities of a chapter 7 trustee are different than chapter 13 and chapter 11 trustee.
COVID-19 caused millions of Americans to lose their jobs, reducing their working hours, skipping on needed insurance policies, and eventually filing for bankruptcy. People are worried about more than just their financial security. If you’re thinking about bankruptcy, you might want to think about alternatives or find other sources of assistance.
With incomes getting slashed, households are feeling the burn. Families in financial turmoil continue to have a lot of concern. Having to file bankruptcy might seem like a last resort in such a scenario, but those who are struggling financially from such situations still have the option to do so.
Many people today are experiencing financial pressure due to the reduced income. This translates to a decreased amount of money to be spent on things essential to living, such as food, medicine, or housing.
In addition to economic stress, some people may be bothered by paying off debt. Personal loans and credit cards are examples of debts a number of people are reluctant to settle.
Although bankruptcy doesn’t clear all debt, it gets rid of most things that happen during the COVID-19 pandemic, like missed rent, credit card debt, and medical debt. The most common types of bankruptcy are Chapter 7 and Chapter 13. Chapter 7 is a liquidation bankruptcy, meaning all the non-exempt assets get sold and all the proceeds go to creditors.
A means test is typically required for debtors filing under Chapter 7 unless they owe more on their business debt than their personal debt. When a person loses their job, they may not be able to file right away because their income is assessed after six months.
A Chapter 13 bankruptcy, on the other hand, is for people who can pay off their debts over three to five years. No assets are given up, but instead, discretionary income is channeled into a repayment plan.
Usually, people who are in a Chapter 13 bankruptcy will have more financial resources than those who are in a Chapter 7 bankruptcy.
While the entire process is a lot more time-consuming than a Chapter 7 bankruptcy, it can prevent the loss of critical assets such as one’s home and car. However, people who have lost their jobs may struggle with finding a viable means to repay the loans.
Debt accumulated after filing for bankruptcy is not dischargeable, and you can only file for bankruptcy under Chapter 7 once after eight years have passed. The time gap between filings under Chapter 13 and filing under another chapter is two years. This is why consumers may want to wait until they’ve accumulated all the debt they’re going to get before filing bankruptcy.
An important first step people need to take to safeguard against bankruptcy is to make sure they have their accounts in good standing both now and in the future. It is important to maintain those accounts in good standing by letting everyone know about their monthly net income.
You need to figure in money from unemployment insurance, current salaries, and anything else. Reported income should also include net income, which is your income after taxes and deductions.
Keep your financial situation in check by staying on top of all your bills, staying in the black as long as possible so that your income picks up, and making ways to settle with your lenders.
In addition to credit cards and other forms of loans, borrowers may also acquire debt via subordinate loans such as medical and auto loans. When you add up your debts, make sure to include the minimum payments due to each of these obligations.
You can only get ahead if you cut unnecessary expenses out of your budget. At least for a temporary period, you need to live a little closer to home and try to eat out less frequently. Consider cutting expenses in other areas of your budget when further reducing your grocery expenditures isn’t practical.
Earning an additional income is another way to improve your finances. A part-time job can add a lot to an individual’s income. A different possibility would be to contribute to the gig economy to make more money. Working more may not be possible, so one can sell possessions on online marketplaces.
Under the CARES Act, credit card companies and lenders are required to make accommodations that allow you to pay less than the minimum amount due within a specified period of time without negatively impacting your credit score.
The CARES Act sparked the Paycheck Protection Program. Your small business could qualify for a loan backed by the Small Business Administration. Getting help with payroll and debt repayment is just two perks of these special loans.
The provisions of the new CARES law provide heightened protections for homeowners who have federally-insured mortgages. The CARES Act provides small business owners the opportunity to secure a special loan to assist with their cash flow. The loan will be forgiven provided that the proceeds are used to pay for payroll costs.
A debt management plan can help you to avoid bankruptcy as well. Credit counselors help debtors lower their interest rates or reduce the payoff amount. If you wish to refrain from submitting for bankruptcy during these hectic times caused by the COVID-19 outbreak, developing a sound financial strategy is necessary.
A federally-backed mortgage may allow you to reduce or suspend your monthly payments for up to 12 months if you are receiving a federal grant. To find out whether you qualify, contact your mortgage lender.
Make sure you ask all your professional service providers about discounts if you are eligible for anything. They may be able to help you by replacing your electricity, gas, water, sewage, removal, and Internet bills with COVID-19 alternatives that may reduce your monthly bill substantially.
Your friends and relatives might be able to lend you some money during this trying time. Make sure you keep a record of the amount owed to you and keep up with the repayment schedule to keep your relationship intact.
Consider enlisting the assistance of debt management companies if you need more money to pay back creditors. As an alternative to bankruptcy, the program of credit counseling involves you paying your creditors through a credit council organization.
It is also possible for you to qualify for a reduced interest rate and for any late fees to be waived, thereby making this option a worthwhile financial option. You may wish to check with your credit card provider for assistance.
Vhanessa Hair is a finance expert who writes and researches for the insurance comparison site, QuickQuote.com.
Most people see money as the thing that makes the world go round. We can’t seem to survive without it. Money offers us the ability to buy things we want and need in life. But sometimes our eyes seem to be bigger than our pockets, and we find ourselves in a position where our debts are too large for our finances.
It can be easy to get ahead of ourselves when we begin making money, and we see what it has to offer. Though you may not be concerned about things like car insurance and bankruptcies, large purchases such as homes, expensive vehicles, and extracurricular activities can quickly place someone in more debt than they thought.
On the other hand, there may sometimes be unforeseen circumstances, such as expensive and unexpected medical bills, which cause us to fall into a place where our payments become too much.
So what should you do if you find yourself in a position where your bills have become overwhelming or too much to handle? Your answer may lie in filing for chapter 13 bankruptcy.
Chapter 13 bankruptcy is the answer for people who make a steady income but have gotten ahead of themselves in terms of bills. You have funds available, but the cost of your debts has gotten to a point where immediate payments are difficult to make.
When you file for chapter 13 bankruptcy, you are essentially creating a payment plan to repay the debts you owe. You will not lose your major assets when choosing this option. For example, if you are in the process of a foreclosure on your home, chapter 13 will stop the foreclosure process rather than the liquidation of your assets to pay off debt which happens in the case of chapter 7 bankruptcy.
There are a few requirements in order to be eligible for chapter 13 bankruptcy such as:
The first step you should take when considering bankruptcy is meeting with a bankruptcy attorney and credit counselor. A credit counselor will provide you with pre-bankruptcy counseling services as well as possible assistance when drafting your repayment plan.
Making an appointment with a bankruptcy attorney is a crucial step in the process. Filing for bankruptcy is no easy task. Without the assistance of an attorney, you may fill something out incorrectly or even miss a step in the process, which can cause your case to simply be thrown out.
Both meetings will allow you to understand your situation and decide if bankruptcy is truly the best option for you.
After you have determined bankruptcy is the right choice, you will file a petition with the bankruptcy court serving your area. You will need to provide information when filing such as:
After you have filed, you will need to propose a repayment plan. The plan must be submitted within 14 days of your filing.
Once this happens, you will have a hearing with a bankruptcy judge or administrator who will determine if your repayment plan meets requirements and is fair. They will have the final say in your payment plan.
Typically, most payment plans made under chapter 13 bankruptcy will extend over a period of 3 to 5 years. After you have filed your petition, you are expected to begin making your payments within 30 days.
An important point to keep in mind for this part of the process — your 30 days to begin making payments starts from your filing date, despite whether your petition has been approved or not.
Your payments will be made to a chapter 13 trustee, who will then distribute them to the appropriate creditors to ensure your debts are being paid down. Some trustees may require your payments to be made through a payroll deduction, which means a form will be sent to your employer so the appropriate funds can be redirected for payments.
You will have no contact with your creditors under chapter 13 protection.
While you are making your payments through the course of your agreed upon period you will also be expected to take a debtor education course, which is typically provided by a non-profit counseling company. The counseling must begin within 180 days after the petition has been filed.
If you fail to make your payments or do not have the funds, this will cause your case to fall back under review. If this happens, the result could be selling off your property in order to pay debts.
Sometimes there is a lot of fear and embarrassment that surrounds the idea of filing for bankruptcy. Though it is understandable to have strong negative feelings about the process, sometimes it is the best choice to make depending on your circumstances.
Once you have completed your agreed upon payment plan period and met your requirements, your remaining dischargeable debt will be wiped out, leaving you back in a place where you are comfortable financially.
The bankruptcy will stay on your credit report for a total of seven years, after which it will be wiped clean and you are able to start over.
Don’t look at bankruptcy as a life sentence. Sometimes it is a necessary process given our circumstances. Chapter 13 gives you an opportunity to keep your assets and pay down your debt, leaving you in a much better place after you have finished your payments.
Alexandra Arcand writes and researches about the laws regarding insurance for the car insurance comparison site, CarInsuranceComparison.com. She enjoys guiding people to the financial help they need.
In certain situations, a debtor may not be able to eliminate any debt. Typically, this is due to the debtor owning assets with a substantial value and/or having substantial household disposable income on a monthly basis.
Assuming an individual has no other reason for filing a chapter 13 case other than dealing with their unsecured debt (ie. credit card, medical bills, personal loans, etc), a person in this situation, may wish to settle the accounts without filing for bankruptcy protection or pursue some type of debt settlement plan. However, a chapter 13 filing may benefit an individual in such a circumstance, as no interest is required to be paid on any of the unsecured debt.
The most a person must pay back to their creditors is the total amount due on their debt. The total amount due does not include interest on any of the unsecured debt. Therefore, it does not matter if the debtor has 50 houses with no mortgages and earns 10 million per year, the debtor will never be required to pay interest on the unsecured debt.
As we know, the interest due on unsecured debt, such as credit cards, is extemely costly. As a result the amount that must be paid back on all credit card debt, without interest, through a chapter 13 case, may be less than the amount paid under a non bankruptcy payment plan.
Robert Manchel, the bankruptcy attorney in NJ. , will discuss your bankruptcy questions at 1(866) 503-5655.
The most prevalent type of bankruptcy filing in New Jersey are Chapter 7, Chapter 13 and Chapter 11. People refer each bankruptcy type as “chapters” because the bankruptcy code reflects the law of each chapter, in the actual chapter number of the code. In other words, chapter 13 laws are located in chapter 13 of the bankruptcy code, which is after chapter 12 of the code.
Chapter 7 is referred to as a liquidation bankruptcy, which is intended to discharge (eliminate) certain debt. An individual person and/or a partnership, or any other corporate type entity may file for chapter 7 bankruptcy protection. Typically, individuals file for chapter 7 protection to eliminate unsecured debt, such as credit card debt and personal loans. People can also discharge (eliminate) secured loans, such as auto loans. However, if you want to keep the collateral, such as an auto, one must continue making the monthly payments.
The chapter 7process will be complete approximately four months after the filing. When considering whether to file for bankruptcy protection, one should seek the counseling of an experienced bankruptcy lawyer. A lawyer will determine if one meets the criteria. Also, an attorney will counsel a person about the consequences of any pre-filing transfers, earned income, receipts of money and asset values that are problematic. Maybe the debtor should wait to file, in order to save assets, or meet the criteria.
Prior to filing the bankruptcy petition with the court, each debtor must complete pre-filing credit counseling, which consists of answering questions and discussing their financial situation with a court approved counseling agent. The counseling may be completed online. The counseling takes about one and one half hours. After the counseling, the agency emails the debtor a certificate reflecting that the credit counseling is complete.
A bankruptcy petition must be completed and filed with the court, together with the counseling certificate. The petition must include household income, expenses, list of creditors and assets. One must also provide various information about property transfers and finances. After the petition is completed , the debtor must review and sign the petition. Experienced bankruptcy lawyers file the petition from their bankruptcy software. However, the petition may be filed with the clerk of court, by submitting paper documents.
A chapter 7 trustee and judge is assigned to each filed case. A trustee’s job is to determine if any property may be sold due to a substantial asset value that may not be fully exempt. Additionally, the trustee advises the judge of his recommendation as to whether a debtor should be granted a discharge of debt. The case is complete when the order of discharge is entered. However, due to atypical circumstances, the order of discharge may be delayed.
The trustee reviews the bankruptcy petition and the documents hereinafter stated: last three years of income tax returns; any and all of the debtor and spouse’s pay stubs, covering the six months prior to the filing; statements of all investments; valuation of real estate; mortgage payoff statement; child support orders; all bank statements for the six months prior to the filing; and, possibly other related documents. Lawyers typically ask for such documents prior to preparing the petition.
After the petition is filed, the court will automatically schedule a 341(a) Creditors’ Meeting before the trustee. The hearing is not in a courtroom and no judge may attend the hearing. The debtor and her attorney attend the hearing, which is located in a classroom setting. The appearance of any creditor is very unusual. Typically, the only creditors having personal issues with the debtor, such as an ex-spouse, appear at the hearing. The trustee will ask the debtor a series of questions about their finances, assets and the information contained on the petition and above referenced documents. Typically, the judge will enter an order discharging debt in about two and one half months after the hearing.
Please note that a person may file a Reaffirmation Agreement with the court regarding their auto financing. This is explained in another part of this website. Also, although very unusual, if the there is an irresolvable issue regarding a creditor, the debtor may need to handle such matters in court. Additionally, if there are funds to distribute to creditors, which is also unusual, the trustee must provide the court with an accounting, that must obtain the court’s approval. However, under the ladder scenario, the order of discharge will not be delayed.
Contact Attorney Robert Manchel at 866 503 5644.
In a typical NJ. chapter 7 bankruptcy case, the debtor intends to discharge certain debt. A chapter 7 bankruptcy discharge means that the debtor is no longer personally liable and/or responsible to pay the debt. In other words, after a discharge, the creditor may never attempt to collect the money from the debtor. An exception to discharge means that a specific type of debt is not discharged and/or eliminated. If a debt is not discharged, the creditor may continue to pursue the debtor for the debt, after the completion of the bankruptcy case.
There are bankruptcy code sections that relate to the ”nondischargeability” of the whole case, including all debt. Under those code sections, if the debtor meets the criteria, he will be unable to proceed with his case and obtain any no discharge of any debt. 11 U.S.C. § 727 is the code section that prohibits a discharge of any debt under a chapter 7 bankruptcy case. However, this blog deals with the exceptions to the discharge of one debt and one creditor. Consequently, the debtor may obtain a discharge of all other debts.
If the creditor has a certain type of lien on property, the company, may possibly be permitted to pursue an action to take the collateral. Unsecured debt, such as credit card debt, does not involve any collateral and/or a lien on property. In a typical New Jersey chapter 7 bankruptcy case, the petition is filed to eliminate unsecured debt. The bankruptcy code provides a list of debts that are specifically “excepted” from a discharge
11 U.S.C, section 523 lists the types of debt that are “excepted” from discharge. Some of the sections of 523 include debt that is automatically “excepted” from discharge if certain criteria are met. There are other portions of section 523 that are only “excepted” from discharge, if the creditor proves certain facts, in court. The ladder scenario requires the creditor to file the appropriate court documents, pursue the process and prevail in court.
The following is a list of code sections that except debt from discharge without requiring the creditor to take any additional legal or court action.
11 U.S.C, section 523, (a)(1)(A) and (B) indicates the specific taxes that are “excepted” from discharge, based on specific criteria;
11 U.S.C, section 523, (a)(3)(A) and (B) excepts from discharge the debt owed to a creditor that was not properly listed on the petition and notified in sufficient time to file a proof of claim, in connection to an asset case;
11 U.S.C, section 523, (a)(5) reflects domestic support obligations are not dischargeable. Domestic Support Obligations are typically child support, alimony payments and other maintenance payments;
11 U.S.C, section 523, (a)(7)(A)(B) covers the types of fines, penalties and taxes that are due to a governmental unit. This subsection also includes the requirement to pay back certain funds to a governmental unit;
11 U.S.C, section 523, (a)(8)(A)(B) includes the inability to discharge student loans;
11 U.S.C, section 523, (a)(9) pertains to debt arising from the death or injury of a person caused by driving while unlawfully intoxicated;
11 U.S.C, section 523, (a)(10) is the debt from a creditor that was or should have been listed in a prior case, wherein the debtor was denied or waived his discharge.
11 U.S.C, section 523, (a)(13) is a debt regarding payment of restitution under Title 18 of the U.S. Code
11 U.S.C, section 523, (a)(14) is tax owed to the U.S. that is “nondischargeable”.
11 U.S.C, section 523, (a)(14)(A) is a tax owed to a governmental unit other than the US;
11 U.S.C, section 523, (a)(14)(B) is a debt that was incurred for fines or penalties in connection with a federal election law violation;
11 U.S.C, section 523, (a)(15) reflects a debt that is due to a spouse, former spouse or child in certain circumstances that is not deemed a Domestic Support Obligation;
11 U.S.C, section 523, (a)(16) is a debt that will be due to a membership association, condominium association, homeowners association and a cooperative corporation, under certain circumstances.
11 U.S.C, section 523, (a)(17) is a fee, cost, and expense that is imposed on a prisoner under specific situations.
11 U.S.C, section 523, (a)(18) (A) (B) pertains to a loan made against a specific retirement fund, such as a 401(k) and IRA, under the Employee Retirement Income Security Act of 1974.
Although additional legal action, by a garden state, chapter 7 bankruptcy attorney, is typically not required, regarding the above list, one should obtain a court order, confirming that a certain debt is dischargeable. Such action should prevent future issues.
Below is a list of debt that is “nondischareable”. However, typically, additional legal action must be pursued, in bankruptcy court, to prove certain required facts necessary to deem the debt “nondischargeable”:
11 U.S.C, section 523, (a)(1)(C) indicates that a tax in connection with fraud regarding the filing of a return is not dischargeable;
11 U.S.C, section 523, (a)(2)(A)(B) is a debt, property and/or service that was obtained or incurred by fraud;
11 U.S.C, section 523, (a)(2)(C)(i)(ii) is a consumer debt, for luxury goods, in excess of $675.00, which is incurred to one creditor, within ninety (90) days, prior to the bankruptcy filing. Additionally, cash advances in excess of $950.00 incurred to one creditor, within seventy (70) days prior to the bankruptcy filing, is non dischargeable;
11 U.S.C, section 523, (a)(4) is a debt incurred by committing fraud or misappropriation of funds, while in a fiduciary capacity regarding the handling of such funds;
11 U.S.C, section 523, (a)(6) pertains to debt caused by willful and malicious injury to a person, property or entity;
11 U.S.C, section 523, (a)(11) is debt incurred or caused by fraud or the misappropriation of funds, in certain circumstances, while in a fiduciary capacity, regarding a depository institution or insured credit union;
11 U.S.C, section 523, (a)(12) is debt incurred by malicious or reckless failure to maintain the required capital of a federal depository institution.
11 U.S.C, section 524, (c) pertains to a debt in which a debtor consents to exclude from discharge. Under these circumstances, the agreement must be filed with the court and the debtor must be provided with the correct disclosures;
11 U.S.C, section 524, (k) pertains to a Reaffirmation Agreement which is an agreement between the debtor and creditor that “excepts” a debt from discharge and requires the debtor to make payments to the creditor. This type of agreement typically relates to a debt that is secured by collateral, such as an automobile.
Contact the Garden State bankruptcy lawyer, Robert Manchel at 866 503 5644 to discuss your questions.
We are available to answer all your questions.
Get an immediate consultation today.
This web site is designed to provide general information regarding the bankruptcy laws. The bankruptcy laws are complex and may be applied differently, in each case, depending on the particular facts. There may be numerous exceptions and variations for each law and rule. Do not rely on the information provided in this web site. If you are considering filing for bankruptcy protection, you should consult with an experienced NJ bankruptcy lawyer. We are a debt relief agency. We Help people file for bankruptcy relief under the bankruptcy code.
Main Office
1 Eves Dr., Suite 111
Marlton, NJ. 08053
(856) 797-1500
Toll-Free: 866.503.5655
Freehold Office:
4400 Route 9 South, first fl.,
Freehold, NJ. 07728
(732) 462-1099
Princeton Office:
707 Alexander Rd., Suite 208,
Princeton, NJ. 08540
(609) 919-0068
East Brunswick Office:
197 Route 18 South,
South Tower, Suite 3000
East Brunswick, NJ. 08816
(732) 628-0300
Toms River Office:
1 Hadley Ave
Toms River, NJ 08753
(732) 240-2300
© Copyright 2021 by Manchel New Jersey Bankruptcy Law, Bankruptcy Lawyer. All Rights Reserved.
Privacy Policy
Website & Marketing by: The Attorneys ATM
