New Jersey Bankruptcy Attorneys
Many people are hesitant to open a discussion about filing for bankruptcy because they worry that their credit will be permanently ruined, that they will be forced to surrender their possessions or lose their home, or that they will be unable to make major purchases in the future. However, the truth is that personal bankruptcy is a powerful debt-fighting tool which, over the years, has allowed millions of New Jersey residents to regain control of their financial futures. If you need help getting your debt under control, turn to the experienced bankruptcy lawyers of Young, Marr, Mallis & Associates for assistance filing Chapter 7 or Chapter 13 in New Jersey.
At Young, Marr, Mallis & Associates, we have filed more than 5,000 bankruptcy cases and have more than 20 years of experience serving debtors throughout the state. Over the decades, we have worked with thousands of individuals from all types of financial backgrounds, gaining countless insights along the way into how to make the bankruptcy process more efficient for our clients. For a free legal consultation about filing for Chapter 13 or Chapter 7 bankruptcy in New Jersey, contact Young, Marr, Mallis & Associates at (609) 755-3115 to get started.
Should You File for Bankruptcy in New Jersey?
Filing for bankruptcy can seem like a complex and daunting process when you are first learning about the subject. However, with the assistance of our seasoned and capable New Jersey bankruptcy attorneys, obtaining a successful discharge is within your reach.
Before you file for bankruptcy in New Jersey, you will be required to complete credit counseling, which can only be administered by a government-approved agency. Once you have submitted proof that you have completed credit counseling successfully, you may file for bankruptcy, provided you meet the residency requirements necessary to file in New Jersey. If this is your second time filing bankruptcy, you may be subject to specific waiting periods before you can obtain another discharge from the bankruptcy court.
A bankruptcy filing consists of several documents, or schedules, that must be completed and submitted to the court. The first document is the bankruptcy petition. This form contains all of the basic information about the individual filing bankruptcy, including the chapter of bankruptcy. Following that will be several schedules that list all of a debtor’s assets, income, and expenses, as well as other financial information. To complete these documents, your experienced New Jersey bankruptcy attorney will need a number of financial statements, including copies of bank statements, income tax returns, and pay stubs.
The two most common types of consumer bankruptcy are called Chapter 7, or liquidation, and Chapter 13, or reorganization. The type of bankruptcy that you will file is, to some extent, determined by a mandatory financial evaluation called the means test, which looks at your financial resources over a six-month period. Depending on the outcome of the means test, you may be required to pay back some or all of your creditors through Chapter 13, or if you qualify, you may be able to obtain a faster discharge with Chapter 7.
If the means test reveals that your income is too high – or too low – you may need to file for a specific chapter of bankruptcy. However, even if you earn a high level of income, you may pass the means test and qualify for Chapter 7 if your living expenses are also high. At Young, Marr, Mallis & Associates, we will guide you through this calculation to help determine the proper chapter of bankruptcy for your situation.
How to File for Bankruptcy in New Jersey
Some people try to save attorney’s fees and file for bankruptcy themselves. Known as “pro se” filings, these kinds of filings are often subject to many errors. The federal Bankruptcy Code is complicated, and there are additional local rules and regulations you must adhere to as well. The smallest error or missed deadline could result in your case being dismissed, jeopardizing your ability to file again or causing you to lose your home. For example, a bankruptcy case can be dismissed within days if any of the required documents are missing or if a debtor failed to take a credit counseling course.
Often, a pro se filer will contact an attorney to get help with mistakes they made, such as failing to list all of their assets or income, filing under the wrong chapter, neglecting asset exemptions, or proposing an unfeasible plan, among other potentially costly errors. In many instances, correcting mistakes is more expensive than filing for bankruptcy with the help of an attorney from the beginning.
Bankruptcy requires a significant amount of work and planning before filing your case. At Young Marr & Associates, our seasoned bankruptcy attorneys will take the necessary time to properly prepare your filing and ensure you do not take any action, such as transferring property, that could weaken your chance of a successful bankruptcy case. A successful bankruptcy case truly begins with the initial consultation.
Chapter 7 vs. Chapter 13: Which Type of Bankruptcy is Right?
The significant difference between Chapter 7 and Chapter 13 is that in Chapter 13, a bankruptcy plan is filed with the court proposing a payment plan lasting three to five years. Your creditors will submit proof of the debt owed, including documents showing the amount due. We will evaluate all of the claims filed by your creditors to ensure they are valid, and we will propose a plan that both addresses their claims and adheres to all necessary provisions of the Bankruptcy Code. The court will then enter an order confirming your plan once it complies with all applicable requirements.
The Chapter 7 bankruptcy process typically lasts from four to six months, though the timeline of each case varies. When you file for Chapter 7, the court will appoint a trustee to assess the “bankruptcy estate,” or all of a debtor’s assets at the time of filing. Depending on how much you owe and the value of your assets, the trustee may sell certain belongings to help repay your debts. However, the bankruptcy code provides several protections, called exemptions, that your New Jersey bankruptcy attorney will use to allow you to keep most, if not all, of your property. If there is non-exempt property available, it may be advisable to file Chapter 13.
Chapter 13 bankruptcy is a longer process that may take three to five years, depending on your debts and disposable income. When you file Chapter 13, you must file a bankruptcy plan. As long as you make consistent payments and comply with the terms of your plan, you should be able to keep all of your property.
One of the great benefits of Chapter 13 is the opportunity for homeowners to catch up on missed mortgage payments, or “arrearages,” preventing foreclosure or a scheduled sheriff sale. If you are worried about losing your home and want to stop foreclosure, Chapter 13 bankruptcy may be one of your strongest options, depending on your financial circumstances and how far the proceedings have advanced. Our experienced bankruptcy lawyers can help you determine which chapter of bankruptcy is right for your situation.
Benefits of Filing Chapter 7 Bankruptcy
Chapter 7, often called “liquidation” or “no-asset” bankruptcy, is the most common type filed by individuals. Generally, debtors who have limited income and who do not own much property or many assets file under Chapter 7. If you meet the income qualifications for Chapter 7, our experienced South Jersey bankruptcy attorney will explain how Chapter 7 eliminates unsecured debt, such as the following:
- Credit card bills
- Personal loans
- Payday loans
- Lines of credit
- Medical bills
- Old utility bills
- Loan deficiencies after a vehicle repossession
- Personal judgments
There are debts, such as criminal restitution, fines, child support, alimony, and certain taxes that are “nondischargeable” and will still remain after the bankruptcy process is completed. Student loans are generally nondischargeable, though a lawsuit could be filed in your bankruptcy proceeding to petition the court to discharge the debt. The standard to allow discharge of student loan debt is challenging to meet, so student loan debt is rarely eliminated.
Despite being known as “liquidation bankruptcy,” you will usually be able to keep all or most of your property. The Bankruptcy Code provides several exemptions that our attorneys utilize to protect your assets. You might also be able to maintain possession of assets that have secured liens attached to them, such as cars, furniture that you are currently paying off, or your home, but you will have to continue making your monthly payments on these items. It is essential to talk with our experienced South Jersey bankruptcy attorney to ensure you can keep the things you need to keep.
Benefits of Filing Chapter 13 Bankruptcy
Often, people who do not qualify for Chapter 7 believe that filing for bankruptcy will not offer them any substantial relief. While stopping a foreclosure or sheriff sale is a significant benefit of Chapter 13, this type of bankruptcy offers additional advantages over dealing directly with your creditors as well as some other benefits that are not readily apparent.
First of all, it is likely that if you do not qualify for Chapter 7, you will be required to pay your unsecured debts. However, in many cases, the amount that a debtor must pay is substantially less than the total amount owed and significantly less than the amount that would satisfy a creditor outside bankruptcy.
For example, a person might have $75,000 in credit card debt. Outside of bankruptcy, creditors could file a collection lawsuit and be awarded a judgment and subsequent wage garnishment. Under these circumstances, money will be deducted directly from a person’s paycheck – often leaving them less than they need to meet their average monthly expenses. Furthermore, any settlement agreement would probably require paying a significant amount of the total due over a short period. Additionally, if an agreement is made, a person will owe federal income tax on any debt that is forgiven through the agreement.
Some people opt to hire a debt consolidation company to negotiate on their behalf. Often, the fees associated with this course of action are more expensive than the typical bankruptcy costs. Also, the total amount a person would be required to pay is usually close to what they could have negotiated on their own. Debt consolidation companies also offer no protection from ongoing or pending lawsuits.
In Chapter 13, unsecured creditors do not have that much power. A debtor must complete a complex financial evaluation known as the means test to determine the amount they will have to pay towards unsecured debt. In many cases, that amount is less than what a creditor would settle for outside the bankruptcy process. In the example above, a debtor might have to pay $25,000 through a five-year bankruptcy plan. The remaining balance would be discharged. Another important benefit of eliminating debt through bankruptcy is that there is no additional tax obligation. Unlike forgiven debt, discharged debt in a bankruptcy is not taxed. This benefit also exists when you have debt discharged through Chapter 7.
If you are paying a monthly car payment and owe more on your vehicle than the car is worth, you might be able to lower your payment through a Chapter 13 bankruptcy. For example, if the remaining balance on your car loan is $15,000 and your car is only worth $10,000, you could be required only to pay the fair market value of your car. However, this benefit is not available to all debtors. For one thing, you must have owned the car for at least 933 days. Our seasoned New Jersey bankruptcy attorneys will thoroughly review the facts in your situation to determine if this is an available benefit.
Before 2008, many homeowners used the excess equity in their property to take a second or third mortgage. After the real estate collapse of 2008, many New Jersey residents found that they owed more on their home then the property was worth. Under certain circumstances, a homeowner in a Chapter 13 bankruptcy with a second mortgage that, when combined with their first mortgage, is higher than the fair market value of the property, could strip the mortgage from the house and have it categorized as an unsecured debt. This benefit could dramatically lower a debtor’s monthly expenses.
The Automatic Stay
No matter which type of bankruptcy you file for, an automatic stay will go into effect as soon as the case commences. An automatic stay is a legal wall that protects you from your creditors. This powerful legal construct stops creditors from calling you, sending you bills, garnishing your wages, or continuing any legal actions against you. This means bank accounts are unfrozen, lawsuits cease, and sheriff sales canceled.
What Types of Debt Does Bankruptcy Eliminate?
There are two categories of debt in a bankruptcy case: “dischargeable” debts, which are debts that can be wiped out by bankruptcy, and “non-dischargeable” debts, or debts that cannot be eliminated by bankruptcy. Fortunately for debtors who file bankruptcy in New Jersey, most debts are considered dischargeable, regardless of whether the debtor files for Chapter 7 or Chapter 13. In fact, Chapter 13 allows debtors to discharge several extra debts that are usually non-dischargeable in Chapter 7.
Some types of debt are almost always dischargeable, while others can only be discharged under rare and specific circumstances. Examples of debts that can usually be wiped out by bankruptcy include, but are not limited to, the following:
- Business debts
- Credit card debts
- Medical debts
- Personal debts (such as loans from friends and family)
Other types of debt can only be discharged if certain conditions are met. For example, tax debt is usually non-dischargeable, but under certain circumstances, older unpaid income tax can be discharged. Our experienced New Jersey attorneys can review your outstanding tax obligations and help determine if your situation meets the required criteria. Additionally, sometimes penalties and interest may be dischargeable even if the principal tax debt is not. To use another example, student loan debt is usually non-dischargeable, but may qualify for a discharge if the debtor can meet specific criteria, which is decided by the court.
While liability for most debts can be discharged, the government has decided that some debts are too pressing to be eliminated by bankruptcy. Examples of non-dischargeable debts in bankruptcy include the following:
- Alimony/spousal support debt
- Child support debt
- Debt from certain court-ordered fines, such as criminal fines or victim restitution
After you file for bankruptcy, but before your debts can be discharged, you will be required to take a debtor financial education course. Debtor education is a federal bankruptcy requirement, and, like credit counseling, providers must come from a pre-approved government list. The purpose of the bankruptcy debtor education requirement is to provide participants with the knowledge and information they need to help budget and manage their finances in the future, to avoid the need for another bankruptcy.
Do I Need an Attorney to File Bankruptcy in New Jersey?
If a debtor wishes to file on their own, it is perfectly legal to do so. The technical term for doing so is “pro se.” However, while it is possible to file for bankruptcy without legal assistance, it is not in your best interest to do so. The state and federal bankruptcy laws are complicated, dense, and ever-changing – and even a seemingly trivial error or omission in your paperwork can lead to delays, needless financial losses, or even the complete dismissal of your case, depending on the severity of the issue. Additionally, your creditors will have attorneys aggressively working to represent their interests.
Another important consideration is that any bankruptcy case that is dismissed could adversely impact your ability to file another bankruptcy. Often, a “pro se” debtor will have their case dismissed quickly due to unfiled paperwork or failing to comply with a provision of the Bankruptcy Code. This could jeopardize the very reason they were filing. For instance, if a homeowner filed for bankruptcy to stop a sheriff sale, the initial petition could stay a scheduled auction. However, if the case is quickly dismissed, then their home could sell the following month while they still believe that the property is protected. Furthermore, if the case is dismissed, any attempts to file again will encounter additional difficulties. In fact, if a “pro se” debtor filed multiple bankruptcies, they could be prohibited from filing again.
Naturally, many people considering bankruptcy are concerned about the cost of hiring an attorney. At Young, Marr, Mallis & Associates, we entirely understand that debtors seeking financial relief are often worried about legal fees and payments. That is why we work diligently to make quality representation affordable.
Don’t let fears about the cost of hiring a bankruptcy lawyer prevent you from taking control of your future. If you’ve been thinking of filing for bankruptcy in New Jersey, ask Young, Marr, Mallis & Associates how we can help you through the process.
Our New Jersey Bankruptcy Lawyers Can Help
Bankruptcy can be both frightening and complicated, but bankruptcy is a federal system designed to help individuals and businesses in financial distress. Our South Jersey bankruptcy lawyers will help you understand the process and the benefits of bankruptcy.
Filing for bankruptcy can be the first step on your path toward financial freedom. Because there are so many misconceptions and myths surrounding bankruptcy, it is essential to speak with our New Jersey bankruptcy attorneys. While you may know that you can eliminate debt through filing, you might not be aware of the exact requirements necessary to qualify for bankruptcy or all of the other potential benefits. Take charge of your finances today. To set up a free, completely confidential legal consultation about Chapter 13 or Chapter 7 bankruptcy in New Jersey, contact the bankruptcy firm of Young, Marr, Mallis & Associates at (609) 755-3115 today