CHAPTER 13 BANKRUPTCY - LAWYER IN HACKENSACK NEW JERSEY (201) 646-3333

 

 Chapter 13 - Bankruptcy Basics

This chapter of the Bankruptcy Code provides for adjustment of debts of an individual with regular income. Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.

Background

A chapter 13 bankruptcy is also called a wage earner's plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. If the debtor's current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period "for cause." (1) If the debtor's current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a period longer than five years. 11 U.S.C. § 1322(d). During this time the law forbids creditors from starting or continuing collection efforts.

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This chapter discusses six aspects of a chapter 13 proceeding: the advantages of choosing chapter 13, the chapter 13 eligibility requirements, how a chapter 13 proceeding works, making the plan work, and the special chapter 13 discharge.

Advantages of Chapter 13

Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all mortgage payments that come due during the chapter 13 plan on time. Another advantage of chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Doing this may lower the payments. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on "consumer debts." This provision may protect co-signers. Finally, chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under chapter 13 protection.

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WHAT SHOULD I EXPECT FROM A BANKRUPTCY ATTORNEY? - ATTORNEY IN HACKENSACK NJ (201) 646-3333

 

What Should I Expect from a Bankruptcy Attorney?

Bankruptcy, like most legal matters, is a process and the safest route is to have an attorney guide you through the process if you want to succeed.

A good bankruptcy attorney will give you peace of mind if they provide at least these four things:

• An initial consultation to get an overview of your case
• Advice on options available, including what type of bankruptcy to file
• Completed paperwork necessary for filing bankruptcy
• Representation when the case goes to court

The bankruptcy process begins with a 30-60 minute interview between you and a lawyer. If you are married, both of you should attend so that all questions can be answered honestly and accurately.

Making guesses about how much you owe and who you owe it to is not a good idea. The attorney will want some paperwork that backs up your answers on how many assets you have and how much you owe. Don’t hold anything back if you want an honest and accurate assessment of your situation.

When the attorney has enough documented evidence to evaluate your case, he should offer advice on how to proceed. A good attorney does not always recommend filing bankruptcy. It’s possible your problem could be resolved through less drastic means like debt settlement or maybe even a debt management program.

If your decision is to file bankruptcy, the next thing to expect from an attorney is filing paperwork with the court. Remember that the attorney is there to protect as many of your assets as he/she can, so chime in on what is most important to you.

Then, there is the matter of appearing before a judge. The lawyer should be experienced enough to give judges convincing evidence that you made some mistakes, have learned your lesson and will do much better financially if the judge will give you a second chance. This often is no problem in a Chapter 7 bankruptcy, but can get tricky in Chapter 13 when the lawyer must lay out a plausible payment plan that you can complete in less than five years.

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Do I Need a Bankruptcy Attorney?

Consumers may choose whether to hire an attorney or represent themselves in filing bankruptcy, but as the numbers cited above from the American Bankruptcy Institute clearly demonstrate, hiring an attorney is a huge advantage.

The math on this subject is overwhelming:

• Only one in 25 consumers using an attorney loses a case when filing Chapter 7. One out of three who files on their own, loses in Chapter 7 cases.
• Only about one in 50 consumers filing for themselves in Chapter 13, wins a case. Hire a lawyer and your chance for success is better than four-out-of-10.

The reasons are fairly obvious. Bankruptcy is a complex subject. Creditors want to get paid by consumers who say they don’t have the money. Lawyers on both sides are trying to convince judges that their client is right.

If you are not experienced in filing legal documents or arguing your case persuasively, you could lose on ridiculously simple mistakes. An experienced attorney knows what papers must be filed and what deadlines must be met. An experienced attorney knows the judges involved and what arguments they must make to get the result.

That is why hiring an attorney has so much higher a success rate that attempts to file on your own.

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WHAT IS CHAPTER 7? BANKRUPTCY LAWYER IN HACKENSACK NJ (201) 646-3333

 

WHAT IS CHAPTER 7?

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.

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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 test for 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.

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EXEMPTIONS - ATTORNEY IN HACKENSACK NEW JERSEY (201) 646-3333

EXEMPTIONS

11 U.S. Code § 522. Exemptions

NJ BANKRUPTCY LAWYER HELP WITH EXEMPTIONS

(a) In this section— (1)  “dependent” includes spouse, whether or not actually dependent; and

 (2)  “value” means fair market value  as of the date of the filing of the petition or, with respect to  property that becomes property of the estate after such date, as of the  date such property becomes property of the estate.

(b) (1)  Notwithstanding section 541 of this title,  an individual debtor may exempt from property of the estate the  property listed in either paragraph (2) or, in the alternative,  paragraph (3) of this subsection. In joint cases filed under section 302 of this title  and individual cases filed under section 301 or 303 of this title by or  against debtors who are husband and wife, and whose estates are ordered  to be jointly administered under Rule 1015(b) of the Federal Rules of  Bankruptcy Procedure, one debtor may not elect to exempt property listed  in paragraph (2) and the other debtor elect to exempt property listed  in paragraph (3) of this subsection. If the parties cannot agree on the  alternative to be elected, they shall be deemed to elect paragraph (2),  where such election is permitted under the law of the jurisdiction where  the case is filed.

(2)  Property listed in this paragraph is property that  is specified under subsection (d), unless the State law that is  applicable to the debtor under paragraph (3)(A) specifically does not so  authorize.

(3) Property listed in this paragraph is— (A)  subject to subsections (o) and (p),  any property that is exempt under Federal law, other than subsection (d)  of this section, or State or local law that is applicable on the date  of the filing of the petition to the place in which the debtor’s  domicile has been located for the 730 days immediately preceding the  date of the filing of the petition or if the debtor’s domicile has not  been located in a single State for such 730-day period, the place in  which the debtor’s domicile was located for 180 days immediately  preceding the 730-day period or for a longer portion of such 180-day  period than in any other place;

(B)  any interest in property in which the debtor had,  immediately before the commencement of the case, an interest as a tenant  by the entirety or joint tenant to the extent that such interest as a  tenant by the entirety or joint tenant is exempt from process under  applicable nonbankruptcy law; and

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(C)  retirement funds to the extent that those funds  are in a fund or account that is exempt from taxation under section 401,  403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986.

  If the effect of the  domiciliary requirement under subparagraph (A) is to render the debtor  ineligible for any exemption, the debtor may elect to exempt property  that is specified under subsection (d).

(4) For purposes of paragraph (3)(C) and subsection (d)(12), the following shall apply: (A)  If the retirement funds are in a retirement fund that has received a favorable determination under section 7805 of the Internal Revenue Code of 1986,  and that determination is in effect as of the date of the filing of the  petition in a case under this title, those funds shall be presumed to  be exempt from the estate.

(B)  If the retirement funds are in a retirement fund that has not received a  favorable determination under such section 7805, those funds are exempt  from the estate if the debtor demonstrates that— (i)  no prior determination to the contrary has been made by a court or the Internal Revenue Service; and

(ii) (I)  the retirement fund is in substantial compliance with the applicable requirements of the Internal Revenue Code of 1986; or

(II)  the retirement fund fails to be in substantial compliance with the applicable requirements of the Internal Revenue Code of 1986 and the debtor is not materially responsible for that failure.

(C)  A direct transfer of retirement funds from 1 fund  or account that is exempt from taxation under section 401, 403, 408,  408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986, under section 401(a)(31) of the Internal Revenue Code of 1986,  or otherwise, shall not cease to qualify for exemption under paragraph  (3)(C) or subsection (d)(12) by reason of such direct transfer.

(D) (i)  Any distribution that qualifies as an eligible rollover distribution within the meaning of section 402(c) of the Internal Revenue Code of 1986  or that is described in clause (ii) shall not cease to qualify for  exemption under paragraph (3)(C) or subsection (d)(12) by reason of such  distribution.

(ii) A distribution described in this clause is an amount that— (I)  has been distributed from a fund or account that  is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or  501(a) of the Internal Revenue Code of 1986; and

(II)  to the extent allowed by law, is deposited in such  a fund or account not later than 60 days after the distribution of such  amount. 

MYTHS ABOUT BANKRUPTCY - BANKRUPTCY ATTORNEY IN HACKENSACK NJ (201) 646-3333

 

MYTHS ABOUT BANKRUPTCY

There are many misconceptions regarding bankruptcy that affect a person's decisions on whether they should file for bankruptcy protection or not.  When considering bankruptcy, it is best to obtain advice from a professional New Jersey bankruptcy lawyer like Rafael Gomez who has the legal expertise to answer all your questions.

At the Law Office of Rafael Gomez, we have the knowledge you will need to fully discuss your options when it comes to dealing with your debt and finding out if bankruptcy is right for you.  There are common myths abounding, which we will answer for you briefly. 

All my debts can be eliminated with bankruptcy.

Although you can discharge quite a few types of debt, certain ones such as child support, alimony, taxes and student loans are still owed and cannot be discharged through any type of bankruptcy.

My credit will be ruined for 10 years.

Although a bankruptcy will appear on your credit history for 10 years, your credit rating will begin to improve as time goes by and you re-establish your credit.  Your credit was probably already affected considerably if you had late payments or any wage garnishments or lawsuits.

Bankruptcy is hard to get through and qualify for.

When you have an experienced bankruptcy lawyer like Rafael Gomez working with you, the most difficult part of it will be in making your own personal decision as to whether  to file or not.  Your attorney will help you with determining which filing is right for you and will take care of all the legal paperwork.

My name is Stephanie Rosado, my family and I have been using Mr Gomez as our attorney for a really long time, he's been very useful and he can help you too. So give him a call now.

I will lose everything  I own.

Most bankruptcies do not affect your being able to keep all of your assets.  Many assets are protected by bankruptcy exemption laws.  In fact, the majority of people who file for bankruptcy give up none of their assets.

I will not be able to get credit again.

Not so.  Although  you will pay higher interest rates for a time, you will begin getting credit offers shortly after your filing. 

My employer will be notified when I file for bankruptcy.

When a person files for bankruptcy, he or she does not need to send a notification to his or her employer. Although bankruptcy cases are public records, it is unlikely that anyone will find out unless you tell them, or unless you are a celebrity or prominent businessperson of some kind (in which case the press may publish information about a bankruptcy case.)

If I file for bankruptcy I will never be able to buy a home or a car.

Most debtors are definitely able to purchase a home or a vehicle even after filing for bankruptcy. It usually takes approximately 2 years until you may purchase a home, and less time for an automobile purchase or for credit card offers.

I will lose my house and my car if I file for bankruptcy.

Although Chapter 7 is associated with a “liquidation” of assets, this does not necessarily mean that you will lose everything, including your house and your car. These are protected to a certain degree in the bankruptcy process, and an attorney can help explain this in more detail as it may apply to your particular case. Chapter 13 bankruptcy provides even more protection to assets, as it is a reorganization of debt.

I'm Jose Bautista, owner of Infinity Express. I recommend Rafael Gomez. I had a case with him with a bunch of tickets from the state and he won. He dismissed most of my tickets and I paid little to no money.

Don't fall for bankruptcy myths.  Get the truth by contacting New Jersey Bankruptcy lawyer Rafael Gomez. He has helped debtors living in Bergen, Hudson and Passaic Counties in Northern New Jersey for many years.

WHO DECLARES BANKRUPTCY - BANKRUPTCY LAWYER IN NEW JERSEY (201)646-3333

 

Who Declares Bankruptcy

The individuals and business who file for bankruptcy have far more debts than money to cover them and don’t see that changing anytime soon. In 2019, bankruptcy filers owed $116 billion and had assets of $83.6 billion, almost 70% of that was real estate holdings, whose real value is debatable.

What is surprising is that people – not businesses – are the ones most often seeking help. They have taken on financial obligations like a mortgage, auto loan or student loan – or perhaps all three! – and don’t have the income to pay for it. There were 774,940 bankruptcy cases filed in 2019, and 97% of them (752,160) were filed by individuals.

Only 22,780 bankruptcy cases were filed by businesses in 2019.

Most of the people filing bankruptcy were not particularly wealthy. The median income for the 488,506 individuals who filed Chapter 7, was just $31,284. Chapter 13 filers were slightly better off with a median income of $41,532.

Part of understanding bankruptcy is knowing that, while bankruptcy is a chance to start over, it definitely affects your credit and future ability to use money. It may prevent or delay foreclosure on a home and repossession of a car, and it can also stop wage garnishment and other legal action creditors use to collect debts, but in the end, there is a price to pay.

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FILING JOINTLY - BANKRUPTCY LAWYER IN NEW JERSEY - (201) 646-3333

 

FILING JOINTLY

Married couples have special issues that they should take into account when filing for bankruptcy. Although not a requirement in New Jersey bankruptcy cases, spouses have the option to file a chapter 7 or chapter 13 bankruptcy petition jointly. This is a special type of bankruptcy filing that allows spouses to file together. Essentially, a joint filing involves two separate bankruptcy cases that are administered as a single case in the interest of judicial economy. Only one filing fee is paid for a joint filing.

https://www.youtube.com/watch?v=4Sms6MX6L-E&list=PL4wm_8cKgyi4kkn4ruAyJpkxnSxUkscVc&index=70

Is an Individual or Joint Filing Right For Me?

Determining whether you should file individually or jointly with your spouse is an important issue to consider when determining whether to file for bankruptcy in New Jersey. If you and your spouse share much of your debt, it may be in your best interests to file your petition jointly, as your spouse may be held liable by creditors for the debt that you share. When you consider that many married couples have joint credit cards, mortgage loans and car loans, filing a bankruptcy case jointly in Bergen/Hudson or Passaic County may be the only way to avoid having one spouse held liable for these debts by creditors who may enter a wage garnishment order or bank levy against the assets you want to protect.

Joint and individual bankruptcy in New Jersey will have different impacts on a debtor depending on whether they file a Chapter 7 or Chapter 13 case. For example, filing a Chapter 13 bankruptcy means that the non-filing spouse may be offered more protection from liability for shared debts. Chapter 7, however, may offer no protection to the non-filing spouse.

Discussing the advantages and impacts that a joint bankruptcy filing by husband and wife in New Jersey will have on you and your spouse is important - and a free consultation with Bergen/Hudson County bankruptcy lawyer, Rafael Gomez will help you get started.


Mr. Gomez has helped many married couples who filed jointly and have lived in, for example, Hackensack, Bogota, Maywood, Little Ferry, Paramus, Rochelle Park, Moonachie, Wood Ridge, Hasbrouck Heights, Lodi, Garfield, Oradell, Closter, Englewood, Bergenfield, Teaneck, Ridgefield Park, Cliffside Park, Palisades Park, Leonia, Fort Lee, Tenafly, Fairview and other Bergen County communities. He has also filed joint bankruptcy cases for married couples living in the Hudson County communities of Union City, West New York, North Bergen, Jersey City, Guttenberg, Secaucus, Bayonne, Kearny, Harrison, East Newark and other nearby communities. In Passaic County, Mr. Gomez has filed joint bankruptcy case/petitions for married couples with marital debt who lived in Paterson, Passaic, Clifton, Hawthorne, Haledon, West Milford, West Paterson/Woodland Park, Prospect Park, Ringwood, Totowa and Wayne.

https://www.youtube.com/watch?v=ED4mCf-NNJo&list=PL4wm_8cKgyi4kkn4ruAyJpkxnSxUkscVc&index=75