Bankruptcy

Bankruptcy is often viewed as an individual’s last resort when financial difficulties arise. And while we do not suggest that filing for bankruptcy would, or should, be anyone’s first choice, it is often, ultimately, the best, most comprehensive, solution to an individual’s financial problems. Certainly, if you find yourself facing overwhelming consumer or business debt, your first step should be to seek the counsel of a qualified bankruptcy attorney.
Unlike the numerous “debt reduction” or “debt consolidation” firms that flood our airways with advertisements, a licensed professional bankruptcy attorney is uniquely qualified to review your case and determine if bankruptcy is the proper course of action for you. Licensed attorneys have taken an oath to represent their clients to the best of their ability. Additionally, conversations with your attorney are confidential. Non-attorney debt firms do not have these same obligations. It is, therefore, better to speak with an attorney first, rather than last.
The process of filing for bankruptcy protection may seem relatively simple for the debtor, but it requires knowledge of very complex bankruptcy laws and regulations and should not be attempted without qualified legal representation. Failure to timely and correctly file required court documents can result in a case’s dismissal or the loss of property.
What follows here is a general overview of the bankruptcy process and requirements for an individual or married couple. There is more detailed information as well as clarification of a number of common misconceptions about bankruptcy which are addressed in more detail in following sections.
Bankruptcy Overview
When an individual, referred to as a “debtor”, files for bankruptcy, he is filing for “relief” or “protection” under the United States Bankruptcy Code. The creation of a Bankruptcy Law is provided for in the U.S. Constitution. An individual may file either under Chapter 7 of the Bankruptcy Code, referred to as “liquidation”, or under Chapter 13, which is often referred to as “reorganization.”
Many people believe that if they file for bankruptcy, they must give up all of their property. To the contrary, however, the Bankruptcy Code provides for what are called “Exemptions” under Section 522 of the Bankruptcy Code which allow for certain values a debtor may hold in various types of property such as real estate, household goods, automobiles, retirement funds, and other property.
Three types of debts are addressed in a debtor’s bankruptcy filing: 1) Secured Debts which include mortgages, car liens, tax and judgment liens; 2) Priority Debts which include unliened taxes, child and marital support obligations; 3) Unsecured Debts which include credit card debt, old utility bills, medical bills, pay-day loans and personal loans.
When a bankruptcy case is filed, the “automatic stay” goes into effect, pursuant to Section 362 of the Bankruptcy Code. This “stay” means that none of the debtor’s creditors may take any further steps to collect on a debt. They cannot call or write the debtor, they cannot file or continue a lawsuit, or execute on a judgment without first receiving the Bankruptcy Court’s permission to do so.
At the completion of a case under Chapter 7, the debtor’s unsecured debts are “discharged”, meaning the debtor no longer has a legal obligation to pay those debts. If the debtor wants to retain property that is subject to a secured debt, such as his home or car, he must continue to make those payments. (More on secured debts below).
At the completion of a Chapter 13 case, after the “Plan of Reorganization” has completed, the debtor also receives a discharge of any remaining unsecured debt. As with a Chapter 7 filing, the debtor must continue to pay secured debt to retain the property.
Robert Manchel, a New Jersey bankruptcy practitioner, will explain how bankruptcy can help you with your debt. Give our office a call at 866-503-5655.

In general, upon the filing of the bankruptcy case, all of the debtor’s property is included in the bankruptcy estate. In a chapter 7, the debtor can keep all property that has low equity or value. Although unusual, if the debtor owns property with substantial value that exceeds the amount of the allowable exemptions, the trustee may be permitted to sell the property. In the event that the debtor owns property with substantial value, the debtor may wish to keep the property by filing a chapter 13 case, and making a monthly payment to the trustee that is commensurate with the property value.
There is certain property that is not included in the bankruptcy estate, no mater the value. “Employee Retirement Income Security Act” (ERISA) qualified retirement plans, such as an: IRA; SEP; employee pension plan, 401k and 403b, are the type of property that is not included in the bankruptcy estate. This means that no matter the value of the retirement plan, the debtor may continue to hold the funds in the account, which will not be included as the debtor’s property.
In chapter 7 and 13 cases, the court requires the debtor to complete two analysis’ to determine the debtor’s monthly disposable income. One analysis is called the Means Test or Current Monthly Income Test and the second test is a comparison of the debtor’s projected income on schedule I, and their monthly expenses on schedule J. In a chapter 7, the debtor may not have any monthly disposable income. In a chapter 13, the debtor must make monthly payments to the trustee, that are no less than the debtor’s monthly disposable income.
Typically, a chapter 7 debtor may use as a legitimate expense any monthly payments for a required (involuntary) pension contribution and payments regarding a pension loan. However, if the pension contribution is not required, the monthly payment, cannot be deducted and used as an expense. However, a chapter 13 debtor may use as an expense, voluntary or non voluntary contribution payments for a pension and payments for a pension loan.
Usually, a New Jersey State or local government employee is required (involuntary) to contribute to his pension and an employee of a private company is not required to contribute to his pension.
Please contact NJ consumer bankruptcy attorney Robert Manchel at 1 (866) 503-5655, for questions about how bankruptcy deals with retirement plans.

Prior to the filing of any bankruptcy case, an individual must obtain debt / credit briefing, within 180 days prior to the filing. The briefing or counseling session is a specific kind of counseling that is tailored for bankruptcy. The briefing must be provided by an agency that has been approved by the Federal Court of the District in which the person is filing for bankruptcy protection. At present, there are about 67 approved agencies, by the State of New Jersey.
After the briefing, the agency will provide a certification indicating the agency’s name, the counselor’s name, and the name of the individual(s) who completed the counseling. This certification must be filed with the court, together with the bankruptcy petition. The court allows a very limited excuse for non-compliance, due to exigent circumstances.
At the commencement of the counseling, the counselor must be notified that the purpose of the briefing is for bankruptcy. This should not be confused with debt consolidation counseling, which is an attempt to reduce one’s debt or monthly debt payments.
The Agency should offer the briefing by telephone and internet and permit both spouses to obtain the briefing together, at the same time. The entire session should last about one to two hours.
The counseling consists of the following. The counselor asks for detailed financial information, the individual’s household income, expenses, and liabilities. The representative may complete a budget and explain how an individual could reduce their expenses. Also, the counselor should provide information as to where one can find coupons and businesses, where a consumer may save money.
Please call Attorney Robert Manchel at 1 (866) 503-5655, if you have questions about debt and what bankruptcy means.

The filing of a bankruptcy case prevents all creditors from commencing or continuing any action against the person filing (debtor) regarding all collection claims for money; or, the enforcement of claims against the debtor’s property, due to money that is owed to a creditor. In general, bankruptcy protects people from bill collectors that are attempting to sue for money or take someone’s property due to money owed. Typically, bankruptcy is not the forum to protect oneself for matters that concern property, where money is not involved.
The bankruptcy code states that a bankruptcy filing initially stops an entity from exercising possession or control of the debtor’s property. However, if the entity that is attempting to control the property is acting due to an issue other than money owed, the bankruptcy court will permit the entity to pursue the action. For example, if an individual is violating a local ordinance by housing hazardous materials, the bankruptcy court will allow the town to commence an action against the homeowner for compliance.
The bankruptcy filing stops the ability of a creditor to pursue any action against the debtor immediately upon the filing. Therefore, the creditor must cease all action against the debtor at the time of the filing, no matter what point in the legal process. If a creditor did not file a lawsuit at the time of the filing, the creditor may not file the lawsuit. If the bankruptcy case is filed after the creditor obtained a judgment and is intending to levy on a bank account, the creditor cannot levy on the account.
A bankruptcy filing stops any creditor from:
filing a lawsuit;
contacting the debtor by any means;
foreclosure action;
eviction action;
loss of drivers’ license due to surcharges, only;
utility termination;
bank account levy;
wage garnishment; etc.
Please contact the Bankruptcy Lawyer Robert Manchel at 1 (866) 503-5655 to discuss how bankruptcy can protect you.

A person cannot file a subsequent chapter 7 case, within eight years of the filing of the prior chapter 7 case that received a discharge. In other words, if a person received a chapter 7 discharge, the debtor cannot receive another chapter 7 discharge unless the subsequent chapter 7 is filed at least eight years from the date of the filing of the prior chapter 7 case that was discharged.
A debtor that received a prior chapter 13 discharge can obtain a subsequent chapter 7 discharge if the prior chapter 7 case was filed at least six years before the filing of the present chapter 13 bankruptcy case. However, there are exceptions as to when a person may file for a chapter 7 after a chapter 13 discharge. The exceptions are as follows: The debtor paid all unsecured debt through their chapter 13 case, or they paid 70% of the unsecured debt and the plan was proposed in good faith, in addition to applying his best efforts.
A chapter 13 debtor who filed and received a prior chapter 7 discharge within four years of the subsequent chapter 13 filing will not receive a discharge of any debt that is not paid through the present chapter 13 plan. Please note that the debtor can file the chapter 13 case under this scenario, but the debtor will not receive a discharge for debt that is not paid through the subsequent chapter 13 filing.
A chapter 13 debtor who filed and received a prior chapter 13 discharge in connection with the prior case that was filed within two years of the subsequent chapter 13 filing will not receive a discharge of any debt that is not paid through the subsequent chapter 13 plan. Please note that the debtor can file the chapter 13 under this scenario, but the debtor will not receive a discharge for any unpaid debt.
A debtor that files a chapter 13 or chapter 7 case after the dismissal of a prior chapter 7 or chapter 13 case, within one year of the subsequent chapter 13 or chapter 7 filing, may need to meet certain criteria to continue the subsequent case.
The New Jersey Bankruptcy Practitioner, Robert Manchel, can be reached at 1 (866) 503-5655, to discuss whether you can file a subsequent bankruptcy case.

New Jersey bankers believe that better times are ahead for the state’s economy, according to a recent poll by the New Jersey Bankers’ Association. In fact, bankers are sufficiently confident that the economy will improve that they are prepared to lend money – despite the fact that few people are trying to borrow.
The poll, which surveyed 120 bankers in the state of New Jersey and surrounding areas, found that just under half of them rated the current economy as “fair” or “poor.” Nevertheless, one-quarter of the bankers surveyed said that they also believe the economy’s health is no longer declining, and that in fact, the nation’s and New Jersey’s economies should begin improving again shortly, with interest rates holding still or even going down in the near future.
Although banks are ready to make loans to qualified customers, most of the bankers surveyed predicted that demand for commercial loans and for refinancing of homes would not increase any time soon. With the unemployment rate in New Jersey stuck at nine percent, most of the bankers surveyed believe that, in the short term, consumers will be filing for bankruptcy more often and also facing more foreclosures.
In a precarious financial situation, loans or refinancing may make your situation worse than it already is. If you’re thinking about filing for bankruptcy in New Jersey or want to know more about how bankruptcy works, please don’t hesitate to contact the experienced New Jersey bankruptcy attorneys at The Law Offices of Robert Manchel. Our experienced lawyers will examine your situation carefully and help you understand your legal rights and options. Call 1-866-503-5655 to learn more.