What is Bankruptcy?
Bankruptcy Proceedings, Filing A Bankruptcy
How Does a Bankruptcy Work?
Bankruptcy occurs when an individual is no longer able to make payments on their debt and the court is asked to step in and renegotiate the debt or get debt forgiveness so that the individual can repay what they owe. In most cases an individual chooses to pursue declaring bankruptcy because they are no longer able to pay their bills and they are financially overwhelmed. When a court declares an individual bankrupt the creditors have to cease in their efforts of collecting debts. In some cases the lender may repossess items and sell them in an attempt to recoup some of their losses; there are some items like houses and vehicles which can be exempt as long as the individual can continue making timely payments. A top Bankruptcy attorney in NJ can help answer all of your bankruptcy related questions and can assist you with filing a bankruptcy. If you are considering filing for bankruptcy contact a bankruptcy attorney in New Jersey today.
A Bankruptcy Can Help You Get Back on Your Feet
Bankruptcy Act Means Test
The first step the bankruptcy attorney takes the client through is a Bankruptcy Act Means Test. This is a detailed analysis of all of the income and expenses that the individual has to deal with. One purpose of this test is to determine which type of bankruptcy the individual can declare Chapter 7 or Chapter 13. The test will take the individual’s income report from the previous 6 months and compare it to the state’s median income. If the individual has an income that is below the state median they will have the option of filing for a Chapter 7 bankruptcy. Individuals who have income which is higher than the median in the state then all of their information will be considered to determine if they should file for a Chapter 7 or Chapter 13 bankruptcy.
Bankruptcy Proceedings
In most cases bankruptcy is designed for a person to find relief from overbearing debts. While all of the individual’s debts must be listed when giving the financial report, some debts cannot be forgiven. Exceptions include school loans, taxes, back child support, or alimony that is owed. Debts which were made in an attempt to cause willful and malicious harm or where falsified information was used to obtain them will be removed during the bankruptcy proceedings.
Who Can File for Bankruptcy?
Anyone can file for bankruptcy. But there are different types of bankruptcies and not everyone will qualify for just any particular kind. An honest person who is in a bind and simply cannot pay the bills might find it beneficial to discuss their situation with a bankruptcy attorney in NJ. If a person recently declared bankruptcy, their options may be more limited. For instance a person who files for a Chapter 7 bankruptcy is not eligible to file for another Chapter 7 for another 8 years. For the most part, bankruptcy is designed for the debtor who honestly accrued too much debt and has no way to be able to repay it. Bankruptcy is not a way to defraud creditors; but a person in real financial trouble can petition the courts for a bankruptcy.
There are several situations where a bankruptcy attorney might advise that a bankruptcy is beneficial. For instance, it might be beneficial for an individual who finds that they are in a bind and just simply are not able to pay their debts. This is the case when the amount required to pay all the debts each month exceeds the income that is generated. It may also be the right choice for an individual who has already tried to work out repayment plans with creditors with no success at all. If they want the complete payment and are not willing to budge but the individual simply does not have the funds there may be no other option other than filing bankruptcy.
After A Bankruptcy
In many cases it will take time to rebuild your credit after filing a bankruptcy. It can stay on a credit report for up to 10 years after the bankruptcy is complete. This can make it difficult to obtain certain types of loans. Before filing a bankruptcy discuss your financial situation with a financial counselor as well as a bankruptcy attorney in NJ. It is important to file the right type of bankruptcy for a particular situation as well as weighing all the pros and cons before going through with it formally.