CLIENT REVIEW

A MESSAGE FROM ONE OF OUR CLIENTS, TALKING ABOUT THE BANKRUPTCY LAWYER MR. RAFAEL GOMEZ

The New Jersey Bankruptcy Lawyer law firm of Mr. R. Gomez, Attorney at Law has its main office located in Hackensack, New Jersey 07601.

This Bergen County Bankruptcy Law Firm has helped thousands of clients with debt problems, car repossessions, foreclosed mortgages, motor vehicle commission (DMV) surcharges, lawsuits, wage garnishments and countless other debt problems which are usually resolved by filing a bankruptcy case in the New Jersey Bankruptcy Courts

BANKRUPTCY - BANKRUPTCY ATTORNEY IN NEW JERSEY

201-646-3333 - HACKENSACK NJ

Should I file bankruptcy? Isn’t it better to borrow money from friends and family to help me pay my debts?

Many clients come to this office after having borrowed money from friends and family and then used the borrowed money to pay some of their debts only to find, months later, that they still cannot payoff their debts. Even worse, they now owe more money than before because they now owe their friends and family.  Borrowing money just creates more debt.  If you consult with an attorney, you may be able to better understand whether bankruptcy is the best alternative for your debt problems.   

How do I file bankruptcy?

Bankruptcy is a legal proceeding under the jurisdiction of the bankruptcy court, which is considered a federal court.  Once you file your case (after paying the appropriate filing fees), you will immediately receive the protection of the court against any legal action taken by a creditor against you to try to collect on its debt(s).  The purpose of filing is to obtain a “discharge” and to protect your assets, including your salary, bank accounts, house, cars, etc., against creditors.  A discharge is an order from the court that essentially erases all of your debt obligations.  However, certain debts are exempt from discharge such as:  certain taxes, student loans, child support, alimony, and other debts that may be better explained to you by an attorney. 

What are the advantages and disadvantages of filing bankruptcy?

The primary advantage is the discharge of all of your debts. Imagine having to pay $250 or more per month just to cover the minimum monthly payments on your credit cards.  Now imagine saving instead of spending those $250 after you have filed bankruptcy and not having the stress and headache of having to pay those debts every month. 

Another advantage to filing bankruptcy is stopping all legal proceedings that creditors have filed against you.  For example, some creditors will sue you to garnish your wages by way of a wage execution order signed by a Judge.  Each creditor has the right to garnish your wages. Bankruptcy also stops all harassing telephone calls creditors make to peoples’ homes and jobs. The major disadvantage to filing bankruptcy is the negative impact it has on your credit history. The three major credit reporting agencies in this country will maintain a record of your bankruptcy in their files for at least 10 years. However, this does not mean that you can never have another credit card again. You may still obtain credit cards but your interest rate will be higher than someone who never filed bankruptcy. Also, given that bankruptcy is more common now than in years past, many banks, mortgage companies and other creditors have relaxed their requirements to qualify for credit, offering some clients credit within two years of filing or even sooner. Don’t be surprised if after you’ve filed for bankruptcy you begin to receive credit card solicitations in the mail again. But, remember, there is always the danger of falling in the same debt cycle again.

What are the first steps I should take if I am considering bankruptcy?

First, you should consult an attorney in order to properly determine whether bankruptcy is right for you. As an attorney, Rafael Gomez will be able to review your financial situation in order to determine whether you meet the criteria for bankruptcy. Mr. Gomez has much experience handling bankruptcy cases and has helped many people with bankruptcy matters. You should bring a pay stub or your income tax forms, all of your monthly bills, car payment bills, and your credit report, if available. If you need other documents for your case, Mr. Gomez will explain what you need during your first consultation.

How long will my case take? And when do I benefit from the advantages of filing?

You benefit immediately upon filing because the court grants you an “automatic stay” which stops any collection action taken against you. After you retain Mr. Gomez to represent you, you may ask creditors to call his office, instead of harassing you, with telephone calls. He will tell the creditors that he is representing you and that any further correspondence should be mailed to him. Normally, a typical case takes between 2 to 6 months, depending on the circumstances.

Do I have to go to court?

Yes. The court appearance is usually brief. It is called a meeting of creditors and it does not involve a judge. In the majority of cases the court appearance is in Newark. The person questioning you in court is another attorney designated as the Trustee by the Bankruptcy Court. The interview normally lasts 15 minutes. Mr. Gomez shall be representing you during the whole process.

If I can’t pay my debts now, how will I be able to pay the lawyer to represent me?

We know this is a difficult situation for you, that’s why we offer our clients a flexible payment plan in order to pay all fees and costs a bit at a time. Remember that once you have hired a lawyer, you no longer need to keep paying those high monthly bills. Whatever you were spending monthly on those bills may now be used to help pay for your legal fees.

WHAT IS CHAPTER 7 BANKRUPTCY? - BANKRUPTCY LAWYER IN NEW JERSEY

WHAT IS CHAPTER 7 BANKRUPTCY?

201-646-3333 - HACKENSACK NJ

Chapter 7 of Title 11 of the United States Code (Bankruptcy Code) governs the process of liquidation under the bankruptcy laws of the United States. (In contrast, Chapters 11 and 13 govern the process of reorganization of a debtor in bankruptcy.) Chapter 7 is the most common form of bankruptcy in the United States. Individuals who reside, have a place of business, or own property in the United States may file for bankruptcy in a federal court under Chapter 7("straight bankruptcy", or liquidation). Chapter 7, as with other bankruptcy chapters, is not available to individuals who have had bankruptcy cases dismissed within the prior 180 days under specified circumstances.

In a Chapter 7 bankruptcy, the individual is allowed to keep certain exempt property. Most liens, however (such as real estate mortgages and security interests for car loans), survive. The value of property that can be claimed as exempt varies from state to state. Other assets, if any, are sold (liquidated) by the interim trustee to repay creditors. Many types of unsecured debt are legally discharged by the bankruptcy proceeding, but there are various types of debt that are not discharged in a Chapter 7. Common exceptions to discharge include child support, income taxes less than 3 years old and property taxes, student loans (unless the debtor prevails in a difficult-to-win adversary proceeding brought to determine the dischargeability of the student loan), and fines and restitution imposed by a court for any crimes committed by the debtor. Spousal support is likewise not covered by a bankruptcy filing nor are property settlements through divorce. Despite their potential non-dischargeability, all debts must be listed on bankruptcy schedules.

A Chapter 7 bankruptcy stays on an individual's credit report for 10 years from the date of filing the Chapter 7 petition. This contrasts with a chapter 13 bankruptcy, which stays on an individual's credit report for 7 years from the date of filing the chapter 13 petition. This may make credit less available and/or terms less favorable, although high debt can have the same effect. That must be balanced against the removal of actual debt from the filer's record by the bankruptcy, which tends to improve creditworthiness. Consumer credit and creditworthiness is a complex subject, however. Future ability to obtain credit is dependent on multiple factors and difficult to predict.

Another aspect to consider is whether the debtor can avoid a challenge by the United States Trustee to his or her Chapter 7 filing as abusive. One factor in considering whether the U.S. Trustee can prevail in a challenge to the debtor's Chapter 7 filing is whether the debtor can otherwise afford to repay some or all of his debts out of disposable income in the five year time frame provided by Chapter 13. If so, then the U.S. Trustee may succeed in preventing the debtor from receiving a discharge under Chapter 7, effectively forcing the debtor into Chapter 13.

It is widely agreed amongst bankruptcy practitioners that the U.S. Trustee has become much more aggressive in recent times in pursuing (what the U.S. Trustee believes to be) abusive Chapter 7 filings Through these activities the U.S. Trustee has achieved a regulatory system that Congress and most creditor-friendly commentors have consistently espoused, i.e., a formal means testfor Chapter 7. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 has clarified this area of concern by making changes to the U.S. Bankruptcy Code that include, along with many other reforms, language imposing a means test for Chapter 7 cases.

Creditworthiness and the likelihood of receiving a Chapter 7 discharge are only a few of many issues to be considered in determining whether to file bankruptcy. The importance of the effects of bankruptcy on creditworthiness is sometimes overemphasized because by the time most debtors are ready to file for bankruptcy their credit score is already ruined.  Also, new credit extended post-petition is not covered by the discharge, so creditors may offer new credit to the newly-bankrupt.