The Great Recession has left far too many New Jersey residents suffering under the weight of job losses, unmanageable mortgage payments and oppressive credit card and medical debt.
Individuals in economic distress often try in vain to handle their financial problems on their own before finally turning to a New Jersey bankruptcy attorney for help. Usually, this delay happens because they don’t know what to expect out of bankruptcy.
While it’s true that filing for bankruptcy can be a stressful process, it’s almost never as difficult or as damaging as most people imagine it will be.
Chapter 7 is the most common form of personal bankruptcy. It allows debtors to liquidate most of their debts and start over fresh. Here are some answers to common questions about the Chapter 7 bankruptcy process:
Will bankruptcy make the debt collectors leave me alone? Yes. After you file for bankruptcy, the court issues an “automatic stay” of collection proceedings. This prohibits debt collectors from contacting you or from taking actions to collect the debt you owe. The automatic stay will be in effect until the end of your bankruptcy proceeding.
What debts can I discharge? Most debts are dischargeable in bankruptcy, including credit card debts, medical bills, many court judgments and personal loans. Secured debts such as car loans and mortgages are also dischargeable although, in some cases, you may have to relinquish the property that served as collateral for the secured loan. It is important to note that some debts are not dischargeable. These include student loans, tax debts, child support and alimony payments, debts related to drunk driving or other criminal convictions and debts incurred within 60 days of the bankruptcy filing.
Will I get to keep my property? Most Chapter 7 bankruptcy filers have limited assets and, as a result, get to keep most or all of their property. Filers with more substantial assets may have some property liquidated to help pay down their debts. The Bankruptcy Code provides a list of exempt property; your New Jersey bankruptcy attorney can help you understand how the exemptions apply to your individual situation.
How do I get started? The first step is to take stock of your financial situation. Make a list of all of your debts, assets and income sources, and then gather all the corresponding paperwork. Once you have done that, make an appointment to talk with a bankruptcy attorney who can help you understand your options.
Source: New Jersey Law Network, “Answers to Frequently Asked Questions About Chapter 7 Bankruptcy,” John D. Kovac.